Single Resource Multi-Item Inventory Systems

Guillermo Gallego, Maurice Queyranne and David Simchi-Levi
Additional contact information
Guillermo Gallego: Columbia University, New York
Maurice Queyranne: University of British Columbia, Vancouver, British Columbia, Canada
David Simchi-Levi: Northwestern University Illinois

Operations Research, 1996, vol. 44, issue 4, 580-595

Abstract: We consider two economic order quantity models where multiple items use a common resource. In the tactical model , the objective is to establish and coordinate order quantities to minimize total inventory ordering and carrying costs without ever exceeding a capacity constraint on the resource. In the strategic model , the objective is to establish and coordinate order quantities to minimize the average cost which includes in addition to the ordering and inventory costs, a cost proportional to the peak usage of the resource. The common resource may be space in an automated warehouse or total capital invested in inventory. We show that a lower bound on the peak resource usage, known for certain subsets of policies, is valid for any feasible policy. We use this to derive lower bounds on the optimum average cost for both models and show that simple heuristics for either model have bounded worst-case performance ratios. More sophisticated heuristics require an effort to solve the embedded staggering problem of time-phasing the arrival of the orders to minimize the maximum use of the resource. We develop a heuristic for the staggering problem and use it to obtain efficient heuristics for the strategic and tactical models.

Keywords: inventory; heuristic; approximation; multi-item (search for similar items in EconPapers)
Date: 1996
References: Add references at CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://dx.doi.org/10.1287/opre.44.4.580 (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:oropre:v:44:y:1996:i:4:p:580-595

Access Statistics for this article

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