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Inventory System (inventory + system)

Distribution by Scientific Domains

Mathematics and Statistics	78%

Selected Abstracts

Integrated multi-echelon supply chain design with inventories under uncertainty: MINLP models, computational strategies

AICHE JOURNAL, Issue 2 2010
Fengqi You
Abstract We address in this article a problem that is of significance to the chemical industry, namely, the optimal design of a multi-echelon supply chain and the associated inventory systems in the presence of uncertain customer demands. By using the guaranteed service approach to model the multi-echelon stochastic inventory system, we develop an optimization model to simultaneously determine the transportation, inventory, and network structure of a multi-echelon supply chain. The model is an MINLP with a nonconvex objective function including bilinear, trilinear, and square root terms. By exploiting the properties of the basic model, we reformulate this problem as a separable concave minimization program. A spatial decomposition algorithm based on the integration of Lagrangean relaxation and piecewise linear approximation is proposed to obtain near global optimal solutions with reasonable computational expense. Examples for specialty chemicals and industrial gas supply chains with up to 15 plants, 100 potential distribution centers, and 200 markets are presented. © 2009 American Institute of Chemical Engineers AIChE J, 2010 [source]

Single-warehouse multi-retailer inventory systems with full truckload shipments

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 5 2009
Yue Jin
Abstract We consider a multi-stage inventory system composed of a single warehouse that receives a single product from a single supplier and replenishes the inventory of n retailers through direct shipments. Fixed costs are incurred for each truck dispatched and all trucks have the same capacity limit. Costs are stationary, or more generally monotone as in Lippman (Management Sci 16, 1969, 118,138). Demands for the n retailers over a planning horizon of T periods are given. The objective is to find the shipment quantities over the planning horizon to satisfy all demands at minimum system-wide inventory and transportation costs without backlogging. Using the structural properties of optimal solutions, we develop (1) an O(T2) algorithm for the single-stage dynamic lot sizing problem; (2) an O(T3) algorithm for the case of a single-warehouse single-retailer system; and (3) a nested shortest-path algorithm for the single-warehouse multi-retailer problem that runs in polynomial time for a given number of retailers. To overcome the computational burden when the number of retailers is large, we propose aggregated and disaggregated Lagrangian decomposition methods that make use of the structural properties and the efficient single-stage algorithm. Computational experiments show the effectiveness of these algorithms and the gains associated with coordinated versus decentralized systems. Finally, we show that the decentralized solution is asymptotically optimal. © 2009 Wiley Periodicals, Inc. Naval Research Logistics 2009 [source]

An optimal critical level policy for inventory systems with two demand classes

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 7 2008
Karin T. Möllering
Abstract Traditional inventory systems treat all demands of a given item equally. This approach is optimal if the penalty costs of all customers are the same, but it is not optimal if the penalty costs are different for different customer classes. Then, demands of customers with high penalty costs must be filled before demands of customers with low penalty costs. A commonly used inventory policy for dealing with demands with different penalty costs is the critical level inventory policy. Under this policy demands with low penalty costs are filled as long as inventory is above a certain critical level. If the inventory reaches the critical level, only demands with high penalty costs are filled and demands with low penalty costs are backordered. In this article, we consider a critical level policy for a periodic review inventory system with two demand classes. Because traditional approaches cannot be used to find the optimal parameters of the policy, we use a multidimensional Markov chain to model the inventory system. We use a sample path approach to prove several properties of this inventory system. Although the cost function is not convex, we can build on these properties to develop an optimization approach that finds the optimal solution. We also present some numerical results. © 2008 Wiley Periodicals, Inc. Naval Research Logistics, 2008 [source]

Probabilistic solution and bounds for serial inventory systems with discounted and average costs

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 6 2007
Xiuli Chao
Abstract We consider the infinite horizon serial inventory system with both average cost and discounted cost criteria. The optimal echelon base-stock levels are obtained in terms of only probability distributions of leadtime demands. This analysis yields a novel approach for developing bounds and heuristics for optimal inventory control polices. In addition to deriving the known bounds in literature, we develop several new upper bounds for both average cost and discounted cost models. Numerical studies show that the bounds and heuristic are very close to optimal.© 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007 [source]

On the first come,first served rule in multi-echelon inventory control

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 5 2007
Sven Axsäter
Abstract A two-echelon distribution inventory system with a central warehouse and a number of retailers is considered. The retailers face stochastic demand and replenish from the warehouse, which, in turn, replenishes from an outside supplier. The system is reviewed continuously and demands that cannot be met directly are backordered. Standard holding and backorder costs are considered. In the literature on multi-echelon inventory control it is standard to assume that backorders at the warehouse are served according to a first come,first served policy (FCFS). This allocation rule simplifies the analysis but is normally not optimal. It is shown that the FCFS rule can, in the worst case, lead to an asymptotically unbounded relative cost increase as the number of retailers approaches infinity. We also provide a new heuristic that will always give a reduction of the expected costs. A numerical study indicates that the average cost reduction when using the heuristic is about two percent. The suggested heuristic is also compared with two existing heuristics. © 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007 [source]

The stochastic joint replenishment problem: A new policy, analysis, and insights

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 6 2006
Banu Yüksel Özkaya
Abstract In this study, we propose a new parsimonious policy for the stochastic joint replenishment problem in a single-location, N -item setting. The replenishment decisions are based on both group reorder point-group order quantity and the time since the last decision epoch. We derive the expressions for the key operating characteristics of the inventory system for both unit and compound Poisson demands. In a comprehensive numerical study, we compare the performance of the proposed policy with that of existing ones over a standard test bed. Our numerical results indicate that the proposed policy dominates the existing ones in 100 of 139 instances with comparably significant savings for unit demands. With batch demands, the savings increase as the stochasticity of demand size gets larger. We also observe that it performs well in environments with low demand diversity across items. The inventory system herein also models a two-echelon setting with a single item, multiple retailers, and cross docking at the upper echelon. © 2006 Wiley Periodicals, Inc. Naval Research Logistics, 2006 [source]

Optimal service rates of a service facility with perishable inventory items

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 5 2002
O. Berman
In this paper we optimally control service rates for an inventory system of service facilities with perishable products. We consider a finite capacity system where arrivals are Poisson-distributed, lifetime of items have exponential distribution, and replenishment is instantaneous. We determine the service rates to be employed at each instant of time so that the long-run expected cost rate is minimized for fixed maximum inventory level and capacity. The problem is modelled as a semi-Markov decision problem. We establish the existence of a stationary optimal policy and we solve it by employing linear programming. Several numerical examples which provide insight to the behavior of the system are presented. © 2002 Wiley Periodicals, Inc. Naval Research Logistics 49: 464,482, 2002; Published online in Wiley InterScience (www.interscience.wiley.com). DOI 10.1002/nav.10021 [source]

Economic ordering quantities for recoverable item inventory systems ,

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 6 2001
Ruud H. TeunterArticle first published online: 3 AUG 200
We study a deterministic EOQ model of an inventory system with items that can be recovered (repaired/refurbished/remanufactured). We use different holding cost rates for manufactured and recovered items, and include disposal. We derive simple square root EOQ formulas for both the manufacturing batch quantity and the recovery batch quantity. [source]

Optimal material control in an assembly system with component commonality

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 5 2001
Narendra Agrawal
Abstract Allocation of scarce common components to finished product orders is central to the performance of assembly systems. Analysis of these systems is complex, however, when the product master schedule is subject to uncertainty. In this paper, we analyze the cost,service performance of a component inventory system with correlated finished product demands, where component allocation is based on a fair shares method. Such issuing policies are used commonly in practice. We quantify the impact of component stocking policies on finished product delays due to component shortages and on product order completion rates. These results are used to determine optimal base stock levels for components, subject to constraints on finished product service (order completion rates). Our methodology can help managers of assembly systems to (1) understand the impact of their inventory management decisions on customer service, (2) achieve cost reductions by optimizing their inventory investments, and (3) evaluate supplier performance and negotiate contracts by quantifying the effect of delivery lead times on costs and customer service. © 2001 John Wiley & Sons, Inc. Naval Research Logistics 48:409,429, 2001 [source]

The economic lot size of the integrated vendor-buyer inventory system derived without derivatives

OPTIMAL CONTROL APPLICATIONS AND METHODS, Issue 3 2002
P.C. Yang
Abstract In previous modellings of the integrated vendor,buyer system, the buyer's economic order quantity and the vendor's optimal number of deliveries are derived by setting the first derivatives to zero and solving the simultaneous equations. The Hessian matrix of second derivatives is used to prove the convexity of the objective function. This procedure can be difficult for students who lack the background of differential calculus. This study develops algebraically the optimal policy of the integrated vendor,buyer inventory system without using differential calculus. A significant cost reduction is also achieved when Goyal's model is modified. Copyright © 2002 John Wiley & Sons, Ltd. [source]

An integrated inventory model with controllable lead time and distribution-free demand

APPLIED STOCHASTIC MODELS IN BUSINESS AND INDUSTRY, Issue 4 2010
Shu-Lu Hsu
Abstract The impact of lead time reduction on an integrated periodic review inventory system comprising a single vendor and multiple buyers with a step crashing cost function and service-level constraints is studied. The probability distribution of demand during the protection period for each buyer is unknown, but the mean and the variance are given. Each production lot of the vendor can be delivered in a number of shipments to all buyers. A minimax distribution-free procedure with Lagrange multipliers is applied to determining the lead time, the common shipment cycle time, the target levels of replenishments and the number of shipments per production cycle so that the expected total system cost is minimized. Numerical experiments along with sensitivity analysis were performed to illustrate the effects of parameters on the decision and the total system cost. Copyright © 2009 John Wiley & Sons, Ltd. [source]