All-or-Nothing Ordering Under a Capacity Constraint

Guillermo Gallego () and L. Beril Toktay ()
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Guillermo Gallego: Department of Industrial Engineering and Operations Research, Columbia University, 500 West 120th Street, New York, New York 10027
L. Beril Toktay: INSEAD, 77305 Fontainebleau Cedex, France

Operations Research, 2004, vol. 52, issue 6, 1001-1002

Abstract: We consider a special case of the single-item, periodic-review inventory control problem with fixed plus linear ordering costs and an upper bound on production capacity. We assume that the fixed cost is large relative to the variable cost and restrict our analysis to full-capacity orders. We show that the optimal policy is a threshold policy, with respect to the inventory position, for a class of cost-to-go functions that include the class of convex functions.

Keywords: production/inventory; capacitated; stochastic; threshold policy (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (12)

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