Browsing by Subject "Lost sales"

Now showing 1 - 6 of 6

Open Access
Age-based vs. stock level control policies for a perishable inventory system
(2001) Tekin, E.; Gürler Ü.; Berk, E.
In this study, we investigate the impact of modified lotsize-reorder control policy for perishables which bases replenishment decisions on both the inventory level and the remaining lifetimes of items in stock. We derive the expressions for the key operating characteristics of a lost sales perishable inventory model, operating under the proposed age-based policy, and examine the sensitivity of the optimal policy parameters with respect to various system parameters. We compare the performance of the suggested policy to that of the classical (Q,r) type policy through a numerical study over a wide range of system parameters. Our findings indicate that the age-based policy is superior to the stock level policy for slow moving perishable inventory systems with high service levels.
Open Access
Analysis of the (Q, r) inventory model for perishables with positive lead times and lost sales
(Institute for Operations Research and the Management Sciences (INFORMS), 2008) Berk, E.; Gürler, Ü.
We consider a perishable inventory system with Poisson demands, fixed shelf lives, constant lead times, and lost sales in the presence of nonnegligible fixed ordering costs. The inventory control policy employed is the continuous-review (Q, r) policy, where r < Q. The system is modeled using an embedded Markov process approach by introducing the concept of the effective shelf life of a batch in use. Using the stationary distribution of the effective shelf life, we obtain the expressions for the operating characteristics and construct the expected cost rate function for the inventory system. Our numerical study indicates that the determination of the policy parameters exactly as modeled herein results in significant improvements in cost rates with respect to a previously proposed heuristic. We also compare the (Q, r) policy with respect to a time-based benchmark policy and find that the (Q, r) policy might be impractical for rare events, but overall appears to be a good heuristic policy.
Open Access
Experimental Results Indicating Lattice-Dependent Policies May Be Optimal for General Assemble-To-Order Systems
(Wiley-Blackwell, 2016) Nadar, E.; Akan, M.; Scheller Wolf, A.
We consider an assemble-to-order (ATO) system with multiple products, multiple components which may be demanded in different quantities by different products, possible batch ordering of components, random lead times, and lost sales. We model the system as an infinite-horizon Markov decision process under the average cost criterion. A control policy specifies when a batch of components should be produced, and whether an arriving demand for each product should be satisfied. Previous work has shown that a lattice-dependent base-stock and lattice-dependent rationing (LBLR) policy is an optimal stationary policy for a special case of the ATO model presented here (the generalized M-system). In this study, we conduct numerical experiments to evaluate the use of an LBLR policy for our general ATO model as a heuristic, comparing it to two other heuristics from the literature: a state-dependent base-stock and state-dependent rationing (SBSR) policy, and a fixed base-stock and fixed rationing (FBFR) policy. Remarkably, LBLR yields the globally optimal cost in each of more than 22,500 instances of the general problem, outperforming SBSR and FBFR with respect to both objective value (by up to 2.6% and 4.8%, respectively) and computation time (by up to three orders and one order of magnitude, respectively) in 350 of these instances (those on which we compare the heuristics). LBLR and SBSR perform significantly better than FBFR when replenishment batch sizes imperfectly match the component requirements of the most valuable or most highly demanded product. In addition, LBLR substantially outperforms SBSR if it is crucial to hold a significant amount of inventory that must be rationed.
Open Access
Joint inventory and constant price decisions for a continuous review system
(Emerald Group, 2012) Çomez, N.; Kiessling, T.
Purpose: The purpose of this paper is to study joint inventory and pricing strategy for a continuous inventory review system. While dynamic pricing decisions are often studied in the literature along with inventory management, the authors' aim in this study is to obtain a single long-run optimal price; also to gain insight about how to obtain the optimal price and inventory control variables simultaneously and then the benefits of joint optimization of the inventory and pricing decisions over the sequential optimization policy often followed in practice. Design/methodology/approach: A general (R;Q) policy system with fixed cost of ordering is modelled and then the case where unsatisfied demand is lost is studied. General forms of both the additive and multiplicative demand models are used to obtain structural results. Findings: By showing optimality conditions on the price and inventory decision variables, two algorithms on how to obtain optimal decision variables, one for additive and another for multiplicative demand-price model are provided. Through extensive numerical analyses, the potential profit increases are reported if the price and inventory problem are solved simultaneously instead of sequentially. In addition, the sensitivities of optimal decision variables to system parameters are revealed. Practical implications: Although there are several studies in the literature investigating emergency price change models, they use arbitrary exogenous prices menus. However, the value of a price change can be better appreciated if the long-run price is optimal for the system. Originality/value: Very few researchers have investigated constant price and inventory optimization, and while there are several past studies demonstrating the benefits of dynamic pricing over a static one, there still are not many findings on the benefit of joint price and inventory optimization. © Emerald Group Publishing Limited.
Open Access
On the (Q,r) policy for perishables with positive lead times and multiple outstanding orders
(Springer New York LLC, 2020-01) Berk, Emre; Gürler, Ülkü; Poormoaied, Saeed
We consider an inventory system for perishables with fixed lifetimes, positive replenishment lead times and lost sales in the presence of non-negligible fixed ordering costs. The system is studied under the lotsize reorder level (Q, r) policy. An exact analysis of this system based on the stationary distribution of the remaining lifetime process is provided by Berk and Gürler (Oper Res 56(5):1238-1246, 2008) under the restriction that there is at most one outstanding order at any time (r< Q). In this work, we generalize their results to allow for more than one outstanding orders (r≥ Q). We provide the operating characteristics of the inventory system and construct the exact expected cost rate expression using a renewal theoretic approach. An illustrative numerical study indicates that allowing for multiple outstanding orders (r≥ Q) may result in significant savings in the expected cost rate, compared to the case with r< Q. In particular, when the fixed lifetimes are short and the ordering costs are low, expected costs can be reduced by more than half.
Open Access
Single item lot-sizing problem for a warm/cold process with immediate lost sales
(Elsevier, 2008-06-16) Berk, E.; Toy, A. Ö.; Hazır, Ö.
We consider the dynamic lot-sizing problem with finite capacity and possible lost sales for a process that could be kept warm at a unit variable cost for the next period t + 1 only if more than a threshold value Qt has been produced and would be cold, otherwise. Production with a cold process incurs a fixed positive setup cost, Kt and setup time, St, which may be positive. Setup costs and times for a warm process are negligible. We develop a dynamic programming formulation of the problem, establish theoretical results on the structure of the optimal production plan in the presence of zero and positive setup times with Wagner–Whitin-type cost structures. We also show that the solution to the dynamic lot-sizing problem with lost sales are generated from the full commitment production series improved via lost sales decisions in the presence of a warm/cold process. 2006 Elsevier B.V. All rights reserved.