A static-dynamic strategy for spare part inventory systems with nonstationary stochastic demand

Z Hua (), J Yang, F Huang and X Xu
Additional contact information
Z Hua: University of Science & Technology of China
J Yang: IBM China Research Lab
F Huang: Tsinghua University
X Xu: University of Science & Technology of China

Journal of the Operational Research Society, 2009, vol. 60, issue 9, 1254-1263

Abstract: Abstract Inventory control is especially difficult when demand is stochastic and nonstationary. We consider a spare part inventory control problem with multiple-period replenishment lead time, and describe a static-dynamic strategy for the problem. By solving a static-dynamic uncertainty model, the strategy first makes decisions on the replenishment periods and order-up-to-levels over the planning horizon, but implements only the decisions of the first period. It then uses the rolling horizon approach in the next period when the inventory status is revised, and the multi-period problem is updated as better forecasts become available. In light of structural property of the developed static-dynamic uncertainty model, the optimal solution to the model can be obtained without much computational effort and thus the strategy can be easily implemented. Computational experiments and result of a case study verify the efficacy of the proposed strategy.

Keywords: inventory; nonstationary demand; spare part; rolling horizon; optimization (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (3)

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DOI: 10.1057/palgrave.jors.2602656

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