Technical note---Linear Inflation Rules for the Random Yield Problem: Analysis and Computations

Authors:
Woonghee Tim Huh;Mahesh Nagarajan
Affiliations:
Department of Industrial Engineering and Operations Research, Columbia University, New York, New York 10027;Operations and Logistics Division, Sauder School of Business, University of British Columbia, Vancouver, British Columbia V6T 1Z2, Canada
Venue:
Operations Research
Year:
2010

Citing 6
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Abstract

In this paper, we propose a simple heuristic approach for the inventory control problem with stochastic demand and multiplicative random yield. Our heuristic tries to find the best candidate within a class of policies that are referred to in the literature as the linear inflation rule (LIR) policies. Our approach is computationally fast, easy to implement, and intuitive to understand. Moreover, we find that in a significant number of instances our heuristic performs better than several other well-known heuristics that are available in the literature.