A two-echelon inventory system with priority shipments
Article Abstract:
A two-echelon inventory system for spare parts is examined. The aggregate model features a single warehouse with N service centers and is characterized by an on-hand and in-transit inventory allocation process to address any demand for unavailable stock at any specific service center. Demand is satisfied either through existing inventory or through external sources. A new rapid approximation procedure proves to be effective in determining the system's projected performance under steady-state conditions, particularly in determining approximations of the fraction of demand satisfied by inventory on-hand and the fraction of demand satisfied by inventory in-transit to the service center level. The system also displays usefulness in the direct bounding of a system's performance for cases where tight bounds exist.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1992
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Evaluating financial risk in the Medicare prospective payment system
Article Abstract:
A study was conducted to evaluate financial risk under the Medicare Prospective Payment System. The system is analogous to an insurance scheme wherein financial risk is mitigated through experience rating. A framework was developed to examine optional reinsurance as an alternative risk mitigation mechanism. The application of optional reinsurance was then analyzed using data on Medicare psychiatric inpatient services. Results indicated the existence of viable strategies for implementing optional reinsurance as a prospective payment scheme. Findings also raised a number of concerns associated with the importance of random differences as a problem from the perspective of individual providers.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1999
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