A dynamic rationing policy for continuous-review inventory systems
Author
Fadıloǧlu, M. M.
Bulut, Ö.
Date
2010Source Title
European Journal of Operational Research
Print ISSN
0377-2217
Electronic ISSN
1745-7653
Publisher
Elsevier
Volume
202
Issue
3
Pages
675 - 685
Language
English
Type
ArticleItem Usage Stats
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Abstract
Stock rationing is an inventory policy that allows differential treatment of customer classes without using separate inventories. In this paper, we propose a dynamic rationing policy for continuous-review inventory systems, which utilizes the information on the status of the outstanding replenishment orders. For both backordering and lost sales environments, we conduct simulation studies to compare the performance of the dynamic policy with the static critical level and the common stock policies and quantify the gain obtained. We propose two new bounds on the optimum dynamic rationing policy that enables us to tell how much of the potential gain the proposed dynamic policy realizes. We discuss the conditions under which stock rationing - both dynamic and static - is beneficial and assess the value of the dynamic policy.
Keywords
Dynamic rationingMultiple demand classes
Rationing
Simulation
Backordering
Continuous-review inventory systems
Critical level
Differential treatment
Dynamic policy
Inventory policies
Lost sale
Multiple demand classes
Rationing
Simulation
Simulation studies
Stock policy
Inventory control