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| Author: | Downs, B. Metiers, R. Semple, J. |
| Title: | Managing Inventory with Multiple Products, Lags in Delivery, Resource Constraints, and Lost Sales: A Mathematical Programming Approach |
| Journal: | Management Science
2001 : MAR, VOL. 47:3, p. 464-479 |
| Index terms: | INVENTORY CONTROL MULTIPRODUCT COMPANIES RESOURCE MANAGEMENT MATHEMATICAL PROGRAMMING |
| Language: | eng |
| Abstract: | This paper develops an order-up-to S inventory model that is designed to handle multiple items, resource constraints, lags in delivery, and lost sales without sacrificing computational simplicity. Mild conditions are shown to ensure that the expected average holding cost and the expected average shortage cost are separable convex functions of the order-up-to levels. The authors develop nonparametric estimates of these costs and use them in conjunction with linear programming to produce what is termed the "LP policy." The LP policy has two major advantages over traditional methods: first/ it can be computed in complex environments such as the one described above; and second, it does not require an explicit functional form of demand, something that is difficult to specify accurately in practice. |
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