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Peeling Layers of an Onion: Inventory Model with Multiple Delivery Modes and Forecast Updates

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  • S. P. Sethi
  • H. Yan
  • H. Zhang

Abstract

This paper is concerned with a periodic review inventory system with fast and slow delivery modes and regular demand forecast updates. At the beginning of each period, on-hand inventory and demand information are updated. At the same time, decisions on how much to order using fast and slow delivery modes are made. Fast and slow orders are delivered at the end of the current and the next periods, respectively. It is shown that there exists an optimal Markov policy and that it is a modified base-stock policy.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:joptap:v:108:y:2001:i:2:d:10.1023_a:1014289032243
    DOI: 10.1023/A:1014289032243
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    References listed on IDEAS

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    Cited by:

    1. Chaolin Yang & Diyuan Huang & Chenyang Xu, 2022. "Multi-index base-stock policy for inventory systems with multiple capacitated suppliers," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 44(1), pages 155-177, March.
    2. Scheller-Wolf, Alan & Tayur, Sridhar, 2009. "Risk sharing in supply chains using order bands--Analytical results and managerial insights," International Journal of Production Economics, Elsevier, vol. 121(2), pages 715-727, October.
    3. Choi, Tsan-Ming, 2007. "Pre-season stocking and pricing decisions for fashion retailers with multiple information updating," International Journal of Production Economics, Elsevier, vol. 106(1), pages 146-170, March.
    4. Li, Xiang & Li, Yongjian & Cai, Xiaoqiang, 2011. "On a multi-period supply chain system with supplementary order opportunity," European Journal of Operational Research, Elsevier, vol. 209(3), pages 273-284, March.
    5. Au, Kin-Fan & Choi, Tsan-Ming & Yu, Yong, 2008. "Fashion retail forecasting by evolutionary neural networks," International Journal of Production Economics, Elsevier, vol. 114(2), pages 615-630, August.
    6. Suresh P. Sethi & Houmin Yan & Hanqin Zhang, 2003. "Inventory Models with Fixed Costs, Forecast Updates, and Two Delivery Modes," Operations Research, INFORMS, vol. 51(2), pages 321-328, April.
    7. Jian Yang & Xiangtong Qi & Yusen Xia, 2005. "A Production-Inventory System with Markovian Capacity and Outsourcing Option," Operations Research, INFORMS, vol. 53(2), pages 328-349, April.
    8. Jing-Sheng Song & Paul Zipkin, 2009. "Inventories with Multiple Supply Sources and Networks of Queues with Overflow Bypasses," Management Science, INFORMS, vol. 55(3), pages 362-372, March.
    9. Choi, Tsan-Ming & Sethi, Suresh, 2010. "Innovative quick response programs: A review," International Journal of Production Economics, Elsevier, vol. 127(1), pages 1-12, September.
    10. Chand, Suresh & Li, Jian & Xu, Yanyi, 2016. "A periodic review inventory model with two delivery modes, fractional lead-times, and age-and-period-dependent backlogging costs," International Journal of Production Economics, Elsevier, vol. 173(C), pages 199-206.
    11. T-M Choi & D Li & H Yan, 2003. "Optimal two-stage ordering policy with Bayesian information updating," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(8), pages 846-859, August.
    12. Sandun C. Perera & Suresh P. Sethi, 2023. "A survey of stochastic inventory models with fixed costs: Optimality of (s, S) and (s, S)‐type policies—Discrete‐time case," Production and Operations Management, Production and Operations Management Society, vol. 32(1), pages 131-153, January.
    13. Felix Papier, 2016. "Supply Allocation Under Sequential Advance Demand Information," Operations Research, INFORMS, vol. 64(2), pages 341-361, April.
    14. Choi, Tsan-Ming (Jason) & Li, Duan & Yan, Houmin, 2006. "Quick response policy with Bayesian information updates," European Journal of Operational Research, Elsevier, vol. 170(3), pages 788-808, May.
    15. Mei, Wanxia & Du, Li & Niu, Baozhuang & Wang, Jincheng & Feng, Jiejian, 2016. "The effects of an undisclosed regular price and a positive leadtime in a presale mechanism," European Journal of Operational Research, Elsevier, vol. 250(3), pages 1013-1025.
    16. Boulaksil, Youssef & Hamdouch, Younes & Ghoudi, Kilani & Fransoo, Jan C., 2021. "Comparing policies for the stochastic multi-period dual sourcing problem from a supply chain perspective," Other publications TiSEM 242598b9-99de-4a3c-a1a9-4, Tilburg University, School of Economics and Management.
    17. Svoboda, Josef & Minner, Stefan & Yao, Man, 2021. "Typology and literature review on multiple supplier inventory control models," European Journal of Operational Research, Elsevier, vol. 293(1), pages 1-23.
    18. Boulaksil, Youssef & Hamdouch, Younes & Ghoudi, Kilani & Fransoo, Jan C., 2021. "Comparing policies for the stochastic multi-period dual sourcing problem from a supply chain perspective," International Journal of Production Economics, Elsevier, vol. 232(C).
    19. Youyi Feng & Mozart B.C. Menezes, 2022. "Integrated production and renewable energy generation in the presence of hydrogen energy storage," Production and Operations Management, Production and Operations Management Society, vol. 31(5), pages 2222-2236, May.
    20. 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.

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