Optimal Inventory Policies with Non-stationary Supply Disruptions and Advance Supply Information
We consider a periodic review, single-item, deterministic demand inventory model under non-stationary supply availability which has an all-or-nothing type of structure. Supply availability information is provided by the supplier which we refer as advance supply information (ASI). For a finite-horizon setting, we show the optimality of state dependent (s,S) policy. For the case with no fixed ordering cost we show the optimality of an order-up-to type policy and prove various properties of the optimal order-up-to levels. We provide a simple characterization of optimal order-up-to levels. For the model with fixed cost, a heuristic algorithm is proposed for finding a good ordering strategy.
Record created on 2011-08-11, modified on 2016-09-16