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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 Publication MATHEMATICS OF OPERATIONS RESEARCH ISSN 0364-765X Volume 42Issue:4Pages:979-1006 Abstract We 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. Keyword stochastic inventory model quantity-dependent setup cost (s, S) policy base stock policy impulse control instantaneous control DOI 10.1287/moor.2016.0833 Language 英语 Funding Project MOE AcRF[R-266-000-086-112] ; NUS Global Asia Institute[R-716-000-006-133] ; National Natural Science Foundation of China[11401566] WOS Research Area Operations Research & Management Science ; Mathematics WOS Subject Operations Research & Management Science ; Mathematics, Applied WOS ID WOS:000414320800004 Publisher INFORMS Citation statistics Document Type 期刊论文 Identifier http://ir.amss.ac.cn/handle/2S8OKBNM/26860 Collection 应用数学研究所 Corresponding Author He, Shuangchi Affiliation 1.Natl Univ Singapore, Dept Ind & Syst Engn, Singapore 117576, Singapore2.Chinese Acad Sci, Acad Math & Syst Sci, Beijing 100190, Peoples R China3.Natl Univ Singapore, Dept Decis Sci, Singapore 119245, Singapore Recommended CitationGB/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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