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A dynamic inventory rationing problem with uncertain demand and production rates

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  • Zeynep Turgay
  • Fikri Karaesmen
  • E. Örmeci

Abstract

We investigate the structural properties of a finite horizon, discrete time single product inventory rationing problem, where we allow random replenishment (production) opportunities. In contrast to the standard models of dynamic capacity control in revenue management or production/inventory systems, we assume that the demand/production rates are not known with certainty but lie in some interval. To address this uncertainty, we formulate a robust stochastic dynamic program and show how the structural properties of the optimal policy propagate to the robust counterpart of the problem. Further, we explore how the optimal policy changes with respect to the uncertainty set. We also show that our results can be extended to certain alternative robust formulations. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Zeynep Turgay & Fikri Karaesmen & E. Örmeci, 2015. "A dynamic inventory rationing problem with uncertain demand and production rates," Annals of Operations Research, Springer, vol. 231(1), pages 207-228, August.
    • Handle: RePEc:spr:annopr:v:231:y:2015:i:1:p:207-228:10.1007/s10479-014-1573-y
    DOI: 10.1007/s10479-014-1573-y
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    1. Zeynep Turgay & Fikri Karaesmen & Egemen Lerzan Örmeci, 2018. "Structural properties of a class of robust inventory and queueing control problems," Naval Research Logistics (NRL), John Wiley & Sons, vol. 65(8), pages 699-716, December.
    2. Bing Lin & Shaoxiang Chen & Yi Feng & Jianjun Xu, 2018. "The Joint Stock and Capacity Rationings of a Make-To-Stock System with Flexible Demand," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(01), pages 1-27, February.
    3. Quan-Lin Li & Yi-Meng Li & Jing-Yu Ma & Heng-Li Liu, 2023. "A complete algebraic solution to the optimal dynamic rationing policy in the stock-rationing queue with two demand classes," Journal of Combinatorial Optimization, Springer, vol. 45(3), pages 1-54, April.
    4. Pinto, Roberto, 2016. "Stock rationing under a profit satisficing objective," Omega, Elsevier, vol. 65(C), pages 55-68.
    5. Xu, Jianjun & Serrano, Alejandro & Lin, Bing, 2017. "Optimal production and rationing policy of two-stage tandem production system," International Journal of Production Economics, Elsevier, vol. 185(C), pages 100-112.

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