Note: A Simple Heuristic for Serial Inventory Systems with Fixed Order Costs

We propose a heuristic for finding base order quantities for stochastic inventory models. The heuristic includes two steps. The first clusters the stages according to cost parameters. The second solves a single-stage problem for each cluster with the original problem data. In a numerical study, we s...

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Bibliographic Details
Published in:Operations research 2008-07, Vol.56 (4), p.1039-1043
Main Author: Shang, Kevin H
Format: Article
Language:English
Subjects:
Analysis
Applied sciences
Average total cost
Business orders
Carrying costs
Cost efficiency
Determinism
Exact sciences and technology
Fixed costs
Heuristic
Heuristic programming
Heuristics
Inventories
Inventory control
Inventory control, production control. Distribution
Inventory management
Logistics
multiecholon
Operating costs
Operational research and scientific management
Operational research. Management science
Optimal solutions
Order quantity
policies
R, nQ
simple solution
Stochastic models
Studies
Technical Notes
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Summary:We propose a heuristic for finding base order quantities for stochastic inventory models. The heuristic includes two steps. The first clusters the stages according to cost parameters. The second solves a single-stage problem for each cluster with the original problem data. In a numerical study, we show that the heuristic is near optimal.
ISSN:0030-364X
1526-5463
DOI:10.1287/opre.1080.0547