A customer-item decomposition approach to stochastic inventory systems with correlation

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)32_Refereed conference paper (with ISBN/ISSN)Not applicablepeer-review

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Author(s)

Detail(s)

Original languageEnglish
Title of host publicationIIE Annual Conference and Expo 2008
Pages1964-1967
StatePublished - 2008
Externally publishedYes

Conference

TitleIIE Annual Conference and Expo 2008
PlaceCanada
CityVancouver, BC
Period17 - 21 May 2008

Abstract

We consider an inventory system with a single stage, periodic review, correlated, non-stationary stochastic demand and correlated, non-stationary stochastic and sequential leadtimes. We use the customer-item decomposition approach to decompose the problem into sub-problems, each involving a single customer-item pair. We then formulate each sub-problem as an optimal stopping problem. We use properties that arise from this formulation to show that the optimal policy is a state-dependent base-stock policy and to show, for several cases, that the optimal policy can be obtained via a polynomial time algorithm. We also use the formulation to construct a myopic heuristic which leads to an explicit solution for the optimal policy in the form of a critical fractile. We characterize conditions under which the myopic heuristic is optimal.

Research Area(s)

  • Demand correlation, Leadtime correlation, Myopic policy, Optimal control, Optimal stopping problem, Stochastic inventory systems

Citation Format(s)

A customer-item decomposition approach to stochastic inventory systems with correlation. / Yimin, Yu; Benjaafar, Saif.

IIE Annual Conference and Expo 2008. 2008. p. 1964-1967.

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)32_Refereed conference paper (with ISBN/ISSN)Not applicablepeer-review