Are Base-Stock Policies Optimal in Inventory Problems with Multiple Delivery Modes?

Qi Feng (), Suresh Sethi, Houmin Yan () and Hanqin Zhang ()
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Qi Feng: School of Management, University of Texas at Dallas, Richardson, Texas 75083-0688
Houmin Yan: Department of Systems Engineering and Engineering Management, Chinese University of Hong Kong, Shatin, N. T., Hong Kong, China
Hanqin Zhang: Academy of Mathematics and Systems Sciences, Academia Sinica, Beijing, 100080, China

Operations Research, 2006, vol. 54, issue 4, 801-807

Abstract: We present a periodic review inventory model with multiple delivery modes. While base-stock policies are optimal for one or two consecutive delivery modes, they are not so otherwise. For multiple consecutive delivery modes, we show that only the fastest two modes have optimal base stocks, and provide a simple counterexample to show that the remaining ones do not. We investigate why the base-stock policy is or is not optimal in different situations. This note is an abridged version of Feng et al. (2006).

Keywords: inventory/production: uncertainty; multiple delivery modes; base-stock policies (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (35)

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