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Are Base-Stock Policies Optimal in Inventory Problems with Multiple Delivery Modes?

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Listed:
  • Qi Feng

    (School of Management, University of Texas at Dallas, Richardson, Texas 75083-0688)

  • Suresh P. Sethi

    (School of Management, University of Texas at Dallas, Richardson, Texas 75083-0688)

  • Houmin Yan

    (Department of Systems Engineering and Engineering Management, Chinese University of Hong Kong, Shatin, N. T., Hong Kong, China)

  • Hanqin Zhang

    (Academy of Mathematics and Systems Sciences, Academia Sinica, Beijing, 100080, China)

Abstract

We present a periodic review inventory model with multiple delivery modes. While base-stock policies are optimal for one or two consecutive delivery modes, they are not so otherwise. For multiple consecutive delivery modes, we show that only the fastest two modes have optimal base stocks, and provide a simple counterexample to show that the remaining ones do not. We investigate why the base-stock policy is or is not optimal in different situations. This note is an abridged version of Feng et al. (2006).

Suggested Citation

  • Qi Feng & Suresh P. Sethi & Houmin Yan & Hanqin Zhang, 2006. "Are Base-Stock Policies Optimal in Inventory Problems with Multiple Delivery Modes?," Operations Research, INFORMS, vol. 54(4), pages 801-807, August.
    • Handle: RePEc:inm:oropre:v:54:y:2006:i:4:p:801-807
    DOI: 10.1287/opre.1050.0271
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    References listed on IDEAS

    as
    1. Q. Feng & G. Gallego & S. P. Sethi & H. Yan & H. Zhang, 2005. "Periodic-Review Inventory Model with Three Consecutive Delivery Modes and Forecast Updates," Journal of Optimization Theory and Applications, Springer, vol. 124(1), pages 137-155, January.
    2. Victoria L. Zhang, 1996. "Ordering policies for an inventory system with three supply modes," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(5), pages 691-708, August.
    3. S. P. Sethi & H. Yan & H. Zhang, 2001. "Peeling Layers of an Onion: Inventory Model with Multiple Delivery Modes and Forecast Updates," Journal of Optimization Theory and Applications, Springer, vol. 108(2), pages 253-281, February.
    4. David G. Lawson & Evan L. Porteus, 2000. "Multistage Inventory Management with Expediting," Operations Research, INFORMS, vol. 48(6), pages 878-893, December.
    5. Yoichiro Fukuda, 1964. "Optimal Policies for the Inventory Problem with Negotiable Leadtime," Management Science, INFORMS, vol. 10(4), pages 690-708, July.
    Full references (including those not matched with items on IDEAS)

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