Newsvendor equations for optimal reorder levels of serial inventory systems with fixed batch sizes

Authors:
M. K. DoğRu;G. J. Van Houtum;A. G. De Kok
Affiliations:
Alcatel-Lucent Bell Labs, Blanchardstown Industrial Park, Blanchardstown, Dublin 15, Ireland;Department of Technology Management, Technische Universiteit Eindhoven, P.O. Box 513, 5600 MB, Eindhoven, The Netherlands;Department of Technology Management, Technische Universiteit Eindhoven, P.O. Box 513, 5600 MB, Eindhoven, The Netherlands
Venue:
Operations Research Letters
Year:
2008

Citing 5
Cited 1

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Abstract

We consider a stochastic serial inventory system with a given fixed batch size per stage and linear inventory holding and penalty costs. For this system, echelon stock (R,nQ) policies are known to be optimal. On the basis of new average costs formulas, we obtain newsvendor equations for the optimal reorder levels.