Journal article

Optimal reordering policies for the AHM inventory model with two supply modes

We characterize the optimal reordering policies for the stationary periodic review AHM inventory model when there is a quick and a -generally cheaper- slow supplier, whose delivery lags differ by one period and whose fixed and unit ordering costs are arbitrary, as generalized (s,S) policies described by four parameters (s1, S1, s2, S2). Computational results using Howard's policy iteration algorithm yield four possible types of such policies depending on the model parameters.


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