Lot sizes, lead times and inprocess inventories
Management Science
Dynamic Programming and Optimal Control, Two Volume Set
Dynamic Programming and Optimal Control, Two Volume Set
Optimal Policies for Multi-Echelon Inventory Problems with Batch Ordering
Operations Research
CONTROL'08 Proceedings of the 4th WSEAS/IASME international conference on Dynamical systems and control
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We study a single-product periodic-review inventory model in which the ordering quantity is either zero or at least a minimum order size. The ordering cost is a linear function of the ordering quantity, and the demand in different time periods are independent random variables. The objective is to characterize the inventory policies that minimize the total discounted ordering, holding, and backorder penalty costs over a finite time horizon. We introduce the concept of an M-increasing function. These functions allow us to characterize the optimal inventory policies everywhere in the state space outside of an interval for each time period. Furthermore, we identify easily computable upper bounds and asymptotic lower bounds for these intervals. Finally, examples are given to demonstrate the complex structure of the optimal inventory policies.