Supplement to 'A Simple Heuristic Policy for Stochastic Distribution Inventory Systems with Fixed Shipment Costs'

Supplement to 'A Simple Heuristic Policy for Stochastic Distribution Inventory Systems with Fixed Shipment Costs'
Author: Han Zhu
Publisher:
Total Pages: 0
Release: 2020
Genre:
ISBN:

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As a supplement to Zhu et al. (2020), this document consists of five parts. First, it provides technical proofs of some theoretical results in Zhu et al. (2020). Second, it introduces some preliminary results on stochastic distribution systems with fixed shipment costs. Third, it provides some examples and illustrations on the modified echelon (r,Q) policies (and some related concepts) studied in Zhu et al. (2020). Fourth, it presents some explicit performance bounds that depends on system primitives for the modified echelon (r,Q) policies in stochastic distribution systems. Finally, extensive numerical experiments are conducted to test the effectiveness of the modified echelon (r,Q) policies. Specifically, the numerical studies show that the modified echelon (r,Q) policies perform well with an average gap of about 5% above the cost lower bound, 2) outperform the echelon-stock (r, Q) policy used in Chen and Zheng (1997), and 3) have robust performances with respect to the allocation rule at the warehouse.

Continuous-Review Policies for a Multi-Echelon Inventory Problem With Stochastic Demand (Classic Reprint)

Continuous-Review Policies for a Multi-Echelon Inventory Problem With Stochastic Demand (Classic Reprint)
Author: Marc de Bodt
Publisher:
Total Pages: 58
Release: 2015-08-05
Genre: Business & Economics
ISBN: 9781332256280

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Excerpt from Continuous-Review Policies for a Multi-Echelon Inventory Problem With Stochastic Demand Continuous-Review Policies for a Multi-Echelon Inventory Problem With Stochastic Demand was written by Marc de Bodt and Stephen C. Graves in 1982. This is a 58 page book, containing 5607 words and 5 pictures. Search Inside is enabled for this title. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.

Stochastic optimization methods for supply chains with perishable products

Stochastic optimization methods for supply chains with perishable products
Author: Michael A. Völkel
Publisher: Logos Verlag Berlin GmbH
Total Pages: 119
Release: 2020-07-03
Genre: Mathematics
ISBN: 3832551077

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This book deals with inventory systems in supply chains that face risks that could render products unsalable. These risks include possible cooling system failures, transportation risks, packaging errors, handling errors, or natural quality deterioration over time like spoilage of food or blood products. Classical supply chain inventory models do not regard these risks. This thesis introduces novel cost models that consider these risks. It also analyzes how real-time tracking with RFID sensors and smart containers can contribute to decision making. To solve these cost models, this work presents new solution methods based on dynamic programming. In extensive computational studies both with experimental as well as real-life data from large players in the retailer industry, the solution methods prove to lead to substantially lower costs than existing solution methods and heuristics.

Single-Stage Approximations of Multiechelon Inventory Models

Single-Stage Approximations of Multiechelon Inventory Models
Author: Kevin Shang
Publisher:
Total Pages: 0
Release: 2022
Genre:
ISBN:

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This chapter summarizes recent development on simple heuristics for optimal inventory policies of multi-echelon inventory systems. These simple heuristics are based on solving a sequence of single-stage inventory problems whose parameters are obtained from the original system data. We mainly focus on series systems under continuous-review and periodic-review schemes and briefly discuss the key results for the assembly and distribution systems. The information is centralized, and the objective is to minimize the average total cost per time period/the expected discounted cost over a planning horizon. When fixed order costs are negligible, echelon base-stock policies are considered. On the other hand, when fixed order costs are significant, we consider (r, q) policies for the continuous-review system and (s,T) policies for the periodic-review system. These heuristics not only simplify the computation and implementation, but also help gain insights into managing inventory in supply chains. We also provide a summary of how to obtain simple solutions to some extend models.

Inventory Routing Problems on Two-echelon Systems

Inventory Routing Problems on Two-echelon Systems
Author: Katyanne Farias de Araújo
Publisher:
Total Pages: 0
Release: 2019
Genre:
ISBN:

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Transport and inventory management activities have a great impact on each other. Ensuring an ideal inventory level can require frequent deliveries, leading to high logistics costs. To optimize the trade-offs between inventory and transportation costs, VMI (Vendor Managed Inventory) systems have been developed to manage inventory and transportation operations together. Given a set of customers with demands over a time horizon, the problem of determining routes and delivery quantities at a minimum inventory holding and transportation costs is known as Inventory Routing Problem (IRP). Two-echelon systems have also been studied to improve the freight vehicle flow inside urban areas. As new management policies have emerged, with the goal of limiting the traffic of large vehicles and their speed in urban centers, Distribution Centers (DC) are introduced to coordinate freight flows inside and outside the urban areas. Products are then delivered from the suppliers to the customers through the DC.We propose to combine a two-echelon system with the IRP. We introduce an Operational Two-Echelon Inventory Routing Problem (O-2E-IRP), which is a new extension of the IRP to the best of our knowledge. On the proposed O-2E-IRP, the customers must be served by a supplier strictly through DC and routes must be defined in both echelons over a given time horizon. Three different replenishment policies and routing configurations are modeled for this problem. We develop two mathematical formulations, and a Branch-and-Cut (B&C) algorithm combined with a matheuristic to solve the problem. In addition, we analyze several valid inequalities available for IRP, and we introduce new ones inherent to the IRP within two echelons. Extensive computational experiments have been carried out on a set of randomly generated instances. The obtained results show that the performance of the methods is related to the inventory policy and routing configuration.In the context of a two-echelon IRP, two important tactical decisions have to be taken in addition to route and quantity delivery decisions: from which DC will be supplied each customer and using which vehicles? Answering these questions is extremely difficult as it implies being able to minimize operational costs for a two-echelon VMI delivery system on long-term and with uncertain demands. In order to deal with this, we introduce the Tactical Two-Echelon Inventory Routing Problem (T-2E-IRP) that optimizes the decisions based on a long-term horizon and considering stochastic demands. Three inventory management policies are modeled and applied at one or both echelons. We develop a simulation approach to solve the T-2E-IRP on a long-term time horizon. We propose four formulations and two B&C algorithms to define the assignment of customers and vehicles to the DC based on a short time horizon. Then, we evaluate these assignment decisions through a simulation tool that solves a subproblem of the T-2E-IRP, which consists of the decisions of deliveries from the supplier to the DC and from the DC to the customers, on a rolling-horizon framework. Extensive computational experiments are performed for a set of randomly generated instances. The impact of several parameters used to determine the assignment of customers and vehicles to DC on the total cost is analyzed. Based on the experiments, we define the combination of parameters that generally provides the best results on the generated instances.

The Impact of Demand Correlation on Replenishment Policies for Multi-Product Stochastic Inventory Systems with Joint-Replenishment Costs

The Impact of Demand Correlation on Replenishment Policies for Multi-Product Stochastic Inventory Systems with Joint-Replenishment Costs
Author: Haolin Feng
Publisher:
Total Pages: 30
Release: 2008
Genre:
ISBN:

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This paper analyzes optimal replenishment policies that minimize expected discounted cost of multi-product stochastic inventory systems. The distinguishing feature of the multi-product inventory system that we analyze is the existence of correlated demand and joint-replenishment costs across multiple products. While prior literature on multi-product stochastic inventory systems has focused on computation of heuristic policies that decouple the N product problem to N single product problems, our focus is on computing and finding the structure of the optimal policies for multi-product inventory systems, particularly when demand is correlated across products. The problem is formulated as a Markov Decision Process (MDP). A method to compute the optimal policy that uses a moving boundary based policy improvement scheme is proposed. Numerical examples show that the (s, c, d, S) policy closely approximates the optimal policy, and can significantly outperform the (s, c, S), P (s, S) and Q(s, S) policies analyzed in prior literature which assume independent demand.

Heuristics for Complex Inventory Systems

Heuristics for Complex Inventory Systems
Author: Erik van der Sluis
Publisher: Thesis Pub
Total Pages: 152
Release: 1993
Genre: Technology & Engineering
ISBN: 9789051702163

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In the first part of this book deterministic single-product, multi-product and distribution problems are examined. Heuristic and optimal solutions for problems with constant and time-varying demand are discussed. Special attention is paid to the choice of the planning horizon. In the second part rolling horizon procedures are applied in stochastic single-product, multi-product and multi-retailer systems