Managing premium wines using an $$(s - 1,s)$$ ( s - 1, s ) inventory policy: a heuristic solution approach

Mauricio Varas (), Franco Basso (), Armin Lüer-Villagra (), Alejandro Mac Cawley and Sergio Maturana ()
Additional contact information
Mauricio Varas: Universidad del Desarrollo
Franco Basso: Universidad Diego Portales
Armin Lüer-Villagra: Universidad Andres Bello
Sergio Maturana: Pontificia Universidad Católica de Chile

Annals of Operations Research, 2019, vol. 280, issue 1, No 15, 376 pages

Abstract: Abstract Operations research models are increasingly being used to support decision making in the wine industry. However, they have not yet been used to support inventory management decisions. In this paper, we develop a heuristic procedure for managing the stock of premium wines motivated by the operations of a small export-focused winery we worked with. Following an $$(s-1,s)$$ ( s - 1 , s ) inventory policy, we assume that the decision maker aims to minimize the steady-state expected values of work in process, overage, and underage costs. The developed heuristic is as follows. First, we approximate the dynamics of the labeling process by a group scheduling policy to obtain the mean delays for each labeled product. Then, we address the problem of setting the inventory positions for the whole product portfolio by solving one newsvendor-type problem for each end-product. We provide some theoretical insights, a numerical example, and we analyze the accuracy of our procedure.

Keywords: Wine industry; OR models; Inventory management; $$(s-1; s)$$ ( s - 1; s ) (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10479-019-03266-3 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:annopr:v:280:y:2019:i:1:d:10.1007_s10479-019-03266-3

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-019-03266-3

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().