An Approximation of the Cost Function for Multi-Echelon Inventory Model

Dieter Hochstaedter
Additional contact information
Dieter Hochstaedter: Institut für Okonometrie und Unternehmensforschung, University of Bonn

Management Science, 1970, vol. 16, issue 11, 716-727

Abstract: For an inventory model with a central warehouse that supplies two satellite warehouses an approximation of the cost function by upper and lower bounds is presented under the assumption that the satellites follow (s, S) policies that are optimal for the satellites alone. The difference between these upper and lower bounds for each period is less than a fixed number. In the infinite horizon model with a discount rate less than one this difference is less than a constant that depends on the mean of the demands, the holding, and the penalty costs. The results are shown for two satellites, they can easily be generalized to k satellites.

Date: 1970
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.16.11.716 (application/pdf)

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:inm:ormnsc:v:16:y:1970:i:11:p:716-727

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().