Optimal and System Myopic Policies for Multi-Echelon Production/Inventory Assembly Systems

Leroy B. Schwarz and Linus Schrage
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Leroy B. Schwarz: University of Rochester
Linus Schrage: University of California, Los Angeles

Management Science, 1975, vol. 21, issue 11, 1285-1294

Abstract: In this paper optimal and near optimal policies are proposed for multi-echelon production/inventory assembly systems under continuous review with constant demand over an infinite planning horizon. Costs at each stage consist of a fixed charge per order or production setup plus a linear holding cost on "echelon" inventory. The objective is minimization of average cost per unit time. The major results of this paper are: a mathematically simple, often optimal, "system myopic" solution, a lower bound on the closeness to optimality of this solution, and a branch and bound algorithm which usually finds the optimal solution quickly.

Date: 1975
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:21:y:1975:i:11:p:1285-1294

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