New bounds and heuristics for (Q,r) policies
Article Abstract:
The effect of variations of demand on single item stochastic inventory systems with setup costs was examined. The distributional data on lead time demand was included into its mean and variance and the resulting problem was solved against the worst possible distribution in this group. A closed form distribution-free solution for Q and r, and upper bounds on the optimal long run average cost and on the optimal batch size were derived for (Q,r) policies. Also, a robust, distribution-free, batch-size heuristic that results in a relative rise in cost of a maximum of 6.07% was developed. Moreover, a sharper lower and upper limits on the long run average cost were achieved when the newsvendor cost is given. These bounds demonstrates how the cost affects fixed setup costs, demand variability and constraints on the batch size.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1998
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Optimal starting times for end-of-season sales and optimal stopping times for promotional fares
Article Abstract:
The problem of selling a fixed stock of items over a limited period of time is experienced in many industries. To maximize revenues in excess of salvage value, these industries adopt various measures such as selling seats before departures for the airline industry, selling seasonal goods for the retail industry, renting rooms before midnight for the hotel industry and selling seats before curtain time for theaters. Pricing is an effective mechanism for maximizing revenues in cases when demand is price-sensitive and stochastic. The problem of determining the optimal timing of a single price adjustment from a certain first price to an increased or decreased second price is considered. The results suggest the best time to raise or lower the initial price.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1995
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Scheduling the production of several items with random demands in a single facility
Article Abstract:
The scheduling of multiple items in a single production facility that produces one item at a time can be a problem when economies of scale necessitate the production of different items. The facility must be scheduled in order to reduce the average cost of set-up, carrying inventory, and incurring stockouts over the long-run. A cost effective tool is developed for scheduling the production of multiple items with random demands in a single production facility and is used to analyze the problem of random demands and backordered stockouts. Research results reveal that optimal safety stocks are singular and that over time, the ratio of backorder to holding plus the cost of the backorder yields the proportion of time that an item is in stock.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1990
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- Abstracts: New bounds and heuristics for (Q,r) policies. Hierarchical planning for probabilistic distribution systems in Euclidian spaces
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