Technical Note---On Optimal Policies for Inventory Systems with Batch Ordering

Woonghee Tim Huh () and Ganesh Janakiraman ()
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Woonghee Tim Huh: Sauder School of Business, University of British Columbia, Vancouver, British Columbia V6T 1Z4, Canada
Ganesh Janakiraman: Naveen Jindal School of Management, The University of Texas at Dallas, Richardson, Texas 75080

Operations Research, 2012, vol. 60, issue 4, 797-802

Abstract: We study a periodically reviewed multiechelon inventory system in series such that order quantities at every stage have to be multiples of a given stage-specific batch size. The batch sizes are nested in the sense that the batch size for every stage is an integer multiple of the batch size for its downstream stage. The problem is that of determining the policy that minimizes the expected discounted sum of costs over a finite horizon. The result is that an echelon ( R, nQ ) policy is optimal when demands are independent across periods or, more generally, Markov-modulated. We also comment on algorithmic implications of our result and on extensions.

Keywords: inventory/production systems; batch ordering; optimal policies (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (8)

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