The cost of using stationary inventory policies when demand is non-stationary |
| |
Authors: | Huseyin Tunc Onur A Kilic S Armagan Tarim Burak Eksioglu |
| |
Institution: | 1. Department of Industrial and Systems Engineering, Mississippi State University, P.O. Box 9542, Mississippi State, MS 39762, USA;2. Department of Operations, University of Groningen, P.O. Box 800, 9700 AV, Groningen, The Netherlands;3. Department of Management, Hacettepe University, 06800, Beytepe, Ankara, Turkey |
| |
Abstract: | Non-stationary stochastic demands are very common in industrial settings with seasonal patterns, trends, business cycles, and limited-life items. In such cases, the optimal inventory control policies are also non-stationary. However, due to high computational complexity, non-stationary inventory policies are not usually preferred in real-life applications. In this paper, we investigate the cost of using a stationary policy as an approximation to the optimal non-stationary one. Our numerical study points to two important results: (i) Using stationary policies can be very expensive depending on the magnitude of demand variability. (ii) Stationary policies may be efficient approximations to optimal non-stationary policies when demand information contains high uncertainty, setup costs are high and penalty costs are low. |
| |
Keywords: | Inventory control Non-stationary demand Stationary policy (s S) policy |
本文献已被 ScienceDirect 等数据库收录! |
|