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A simple procedure for determining order quantities under a fill rate [An article from: European Journal of Operational Research]
Book Details
Author(s)
S. Axsater
Publisher
Elsevier
ISBN / ASIN
B000P6O3LG
ISBN-13
978B000P6O3L3
Availability
Available for download now
Sales Rank
#12,998,998
Marketplace
United States 🇺🇸
Description
This digital document is a journal article from European Journal of Operational Research, published by Elsevier in 2006. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.
Description:
One of the most common practical inventory control problems is considered. A single-echelon inventory system is controlled by a continuous review (R,Q) policy. The lead-time demand is normally distributed. We wish to minimize holding and ordering costs under a fill rate constraint. Although, it is not especially complicated to derive the optimal solution, it is much more common in practice to use a simple approximate two-step procedure where the order quantity is determined from a deterministic model in the first step. We provide an alternative, equally simple technique, which is based on the observation that the considered problem for each considered fill rate has a single parameter only. The optimal solution for a grid of parameter values is stored in a file. When solving the problem for an item we use interpolation, or for parameter values outside the grid special approximations. The approximation errors turn out to be negligible. As an alternative to the interpolation we also provide polynomial approximations.
Description:
One of the most common practical inventory control problems is considered. A single-echelon inventory system is controlled by a continuous review (R,Q) policy. The lead-time demand is normally distributed. We wish to minimize holding and ordering costs under a fill rate constraint. Although, it is not especially complicated to derive the optimal solution, it is much more common in practice to use a simple approximate two-step procedure where the order quantity is determined from a deterministic model in the first step. We provide an alternative, equally simple technique, which is based on the observation that the considered problem for each considered fill rate has a single parameter only. The optimal solution for a grid of parameter values is stored in a file. When solving the problem for an item we use interpolation, or for parameter values outside the grid special approximations. The approximation errors turn out to be negligible. As an alternative to the interpolation we also provide polynomial approximations.
