In:
Management Science, Institute for Operations Research and the Management Sciences (INFORMS), Vol. 53, No. 9 ( 2007-09), p. 1486-1500
Abstract:
We consider a single-product inventory system that serves multiple demand classes, which differ in their shortage costs or service-level requirements. We assume a critical-level control policy, and a backorder clearing mechanism in which we treat a backorder for a lower-priority class equivalent to a reserve-stock shortfall for the higher-priority class. We show the equivalence between this inventory system and a serial inventory system. Based on this equivalence, we develop a model for cost evaluation and optimization under the assumptions of Poisson demand, deterministic replenishment lead time, and a continuous-review (Q, R) policy with rationing. We propose a computationally efficient heuristic and develop a bound on its performance. We provide a numerical experiment to show the effectiveness of the heuristic and the value from a rationing policy. Finally, we describe how to extend the model to permit service times, and how to extend the model to a multi-echelon setting.
Type of Medium:
Online Resource
ISSN:
0025-1909
,
1526-5501
DOI:
10.1287/mnsc.1070.0701
Language:
English
Publisher:
Institute for Operations Research and the Management Sciences (INFORMS)
Publication Date:
2007
detail.hit.zdb_id:
206345-1
detail.hit.zdb_id:
2023019-9
SSG:
3,2
