Flexible service policies for a Markov inventory system with two demand classes

Mingwu Liu, Mengying Feng and Chee Yew Wong

International Journal of Production Economics, 2014, vol. 151, issue C, 180-185

Abstract: This paper explores flexible service policies for an (r, Q) Markov inventory system with two classes of customers, ordinary and prioritized customers. When the on-hand inventory drops to pre-determined safety level r, arrival ordinary customers receive service at probability p. Firstly, the inventory level state transitions equation is set up. The steady-state probability distribution and the system's performance measures which are used for the inventory control are derived. Next, a long-run average inventory cost function is established and a mixed integer optimization model is set up. And, an improved genetic algorithm for the optimum control policies is presented. Finally, the optimal inventory control polices and the sensitivities are investigated through numerical experiments.

Keywords: Markov inventory system; Two demand classes; Inventory control; Genetic algorithm (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:151:y:2014:i:c:p:180-185

DOI: 10.1016/j.ijpe.2013.10.010

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