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- Title
A Single-Unit Decomposition Approach to Multiechelon Inventory Systems.
- Authors
Muharremoglu, Alp; Tsitsiklis, John N.
- Abstract
We show the optimality of state-dependent echelon base-stock policies in uncapacitated serial inventory systems with Markov-modulated demand and Markov-modulated stochastic lead times in the absence of order crossing. Our results cover finite-time horizon problems as well as infinite-time horizon formulations, with either a discounted or an average cost criterion. We employ a novel approach, based on a decomposition of the problem into a series of single-unit single-customer problems that are essentially decoupled. Besides providing a simple proof technique, this approach also gives rise to efficient algorithms for the calculation of the base-stock levels.
- Subjects
INVENTORY theory; MARKOV processes; LEAD time (Supply chain management); INVENTORIES; MATHEMATICAL optimization; OPERATIONS research
- Publication
Operations Research, 2008, Vol 56, Issue 5, p1089
- ISSN
0030-364X
- Publication type
Article
- DOI
10.1287/opre.1080.0620