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Optimal Ordering Policy for Inventory Systems with Quantity-Dependent Setup Costs
He, Shuangchi1; Yao, Dacheng2; Zhang, Hanqin3
2017-11-01
Source PublicationMATHEMATICS OF OPERATIONS RESEARCH
ISSN0364-765X
Volume42Issue:4Pages:979-1006
AbstractWe consider a continuous-review inventory system in which the setup cost of each order is a general function of the order quantity and the demand process is modeled as a Brownian motion with a positive drift. Assuming the holding and shortage cost to be a convex function of the inventory level, we obtain the optimal ordering policy that minimizes the long-run average cost by a lower bound approach. To tackle some technical issues in the lower bound approach under the quantity-dependent setup cost assumption, we establish a comparison theorem that enables one to prove the global optimality of a policy by examining a tractable subset of admissible policies. Since the smooth pasting technique does not apply to our Brownian inventory model, we also propose a selection procedure for computing optimal policy parameters when the setup cost is a step function.
Keywordstochastic inventory model quantity-dependent setup cost (s, S) policy base stock policy impulse control instantaneous control
DOI10.1287/moor.2016.0833
Language英语
Funding ProjectMOE AcRF[R-266-000-086-112] ; NUS Global Asia Institute[R-716-000-006-133] ; National Natural Science Foundation of China[11401566]
WOS Research AreaOperations Research & Management Science ; Mathematics
WOS SubjectOperations Research & Management Science ; Mathematics, Applied
WOS IDWOS:000414320800004
PublisherINFORMS
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Document Type期刊论文
Identifierhttp://ir.amss.ac.cn/handle/2S8OKBNM/26860
Collection应用数学研究所
Corresponding AuthorHe, Shuangchi
Affiliation1.Natl Univ Singapore, Dept Ind & Syst Engn, Singapore 117576, Singapore
2.Chinese Acad Sci, Acad Math & Syst Sci, Beijing 100190, Peoples R China
3.Natl Univ Singapore, Dept Decis Sci, Singapore 119245, Singapore
Recommended Citation
GB/T 7714
He, Shuangchi,Yao, Dacheng,Zhang, Hanqin. Optimal Ordering Policy for Inventory Systems with Quantity-Dependent Setup Costs[J]. MATHEMATICS OF OPERATIONS RESEARCH,2017,42(4):979-1006.
APA He, Shuangchi,Yao, Dacheng,&Zhang, Hanqin.(2017).Optimal Ordering Policy for Inventory Systems with Quantity-Dependent Setup Costs.MATHEMATICS OF OPERATIONS RESEARCH,42(4),979-1006.
MLA He, Shuangchi,et al."Optimal Ordering Policy for Inventory Systems with Quantity-Dependent Setup Costs".MATHEMATICS OF OPERATIONS RESEARCH 42.4(2017):979-1006.
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