Journal ArticleDOI
Optimal Dynamic Production and Inventory Transshipment Policies for a Two-Location Make-to-Stock System
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This paper analyzes the optimal production and transshipment policy for a two-location make-to-stock queueing system with exponential production and interarrival times and develops three easy- to-implement heuristics that work very well for a large range of cost parameters.Abstract:
Inventory sharing through transshipment has attracted a great deal of attention from researchers and practitioners due to its potential for increasing service levels while simultaneously decreasing stock levels. In this paper, we analyze the optimal production and transshipment policy for a two-location make-to-stock queueing system with exponential production and interarrival times. A key feature of our model is that we allow transshipments to be triggered by both demand arrivals and production completions. Thus, transshipment is used to achieve production flexibility through inventory reallocation, as well as to fill emergency demands. We also consider capacity issues in transshipment by modeling each location as a single-server, make-to-stock queueing system. In this setting, we prove that the optimal production policy for each location belongs to the “hedging point” family of policies, while the optimal demand filling policy belongs to the “state-dependent rationing” family of policies. We analyze the structural properties of the optimal policy and provide conditions under which the optimal policy can be simplified. Given the complex nature of the optimal policy, we develop three easy-to-implement heuristics that work very well for a large range of cost parameters.read more
Citations
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Optimal control of a production-inventory system with both backorders and lost sales
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Stock rationing in an M/E r /1 multi-class make-to-stock queue with backorders
TL;DR: In this article, a single-item make-to-stock production system is presented, where the item is demanded by several classes of customers arriving according to Poisson processes with different backorder costs.
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Managing an Available-to-Promise Assembly System with Dynamic Short-Term Pseudo-Order Forecast
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References
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Journal ArticleDOI
Minimizing a Submodular Function on a Lattice
TL;DR: General conditions under which a collection of optimization problems, with the objective function and the constraint set depending on a parameter, has optimal solutions that are an isotone function of the parameter are given.
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Applying a New Device in the Optimization of Exponential Queuing Systems
TL;DR: A new definition of the time of transition is provided, which is able to utilize the inductive approach in a manner characteristic of inventory theory, and a policy optimal for all sufficiently small discount factors can be obtained from the usual average cost functional equation without recourse to further computation.
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Inventory rationing in a make-to-stock production system with several demand classes and lost sales
TL;DR: In this paper, the stock rationing problem of a single-item, make-to-stock production system with several demand classes and lost sales was considered, and it was shown that the optimal policy can be characterized by a sequence of monotone rationing levels.
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Optimal and Approximate Policies in Multiperiod, Multilocation Inventory Models with Transshipments
TL;DR: The effects on the optimal ordering policy and its cost of allowing for interactions among retail outlets and a heuristic solution technique employing Monte Carlo integration are examined in order to gauge the contribution of this model.
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Modelling Emergency Lateral Transshipments in Inventory Systems
TL;DR: This paper provides a new technique for modelling such lateral transshipments in continuous review inventory systems with one-for-one replenishments and Poisson demand and applies this technique to a two-echelon system with repairable items.