We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Optimal Ordering Policies for Inventory Problems With Dynamic Information Delays.
- Authors
Bensoussan, Alain; Çakanyıldırım, Metin; Sethi, Suresh P.
- Abstract
Information delays exist when the most recent inventory information available to the Inventory Manager (IM) is dated. In other words, the IM observes only the inventory level that belongs to an earlier period. Such situations are not uncommon, and they arise when it takes a while to process the demand data and pass the results to the IM. We introduce dynamic information delays as a Markov process into the standard multiperiod stochastic inventory problem with backorders. We develop the concept of a reference inventory position. We show that this position along with the magnitude of the latest observed delay and the age of this observation are sufficient statistics for finding the optimal order quantities. Furthermore, we establish that the optimal ordering policy is of state-dependent base-stock type with respect to the reference inventory position (or state-dependent ( s, S) type if there is a fixed ordering cost). The optimal base stock and ( s, S) levels depend on the magnitude of the latest observed delay and the age of this observation. Finally, we study the sensitivity of the optimal base stock and the optimal cost with respect to the sufficient statistics.
- Subjects
STOCHASTIC orders; INVENTORY control; INFORMATION resources management; RETAIL industry security measures; STOCKS (Finance); SECURITIES industry laws; SUFFICIENT statistics; DISTRIBUTION (Probability theory); MARKOV processes; INDUSTRIAL procurement
- Publication
Production & Operations Management, 2007, Vol 16, Issue 2, p241
- ISSN
1059-1478
- Publication type
Article
- DOI
10.1111/j.1937-5956.2007.tb00178.x