IDEAS home Printed from https://ideas.repec.org/a/vrs/organi/v42y2009i4p129-136n3.html
   My bibliography  Save this article

Heuristic Approach to Inventory Control with Advance Capacity Information

Author

Listed:
  • Jakšič Marko

    (Faculty of Economics, University of Ljubljana, Ljubljana, Slovenia, Kardeljeva ploščad 17, Ljubljana School of Industrial Engineering, Eindhoven University of Technology, The Netherlands)

  • Rusjan Borut

    (Faculty of Economics, University of Ljubljana, Ljubljana, Slovenia, Kardeljeva ploščad 17, Ljubljana)

Abstract

There is a growing trend of information sharing within modern supply chains. This trend is mainly stimulated by recent developments in information technology and the increasing awareness that accurate and timely information helps firms cope with volatile and uncertain business conditions. We model a periodic-review, single-item, capacitated stochastic inventory system, where a supply chain member has the ability to obtain advance capacity information (‘ACI’) about future supply capacity availability. ACI is used to reduce the uncertainty of future supply and thus enables the decision-maker to make better ordering decisions. We develop an easily applicable heuristic based on insights gained from an analysis of the optimal policy. In a numerical study we quantify the benefits of ACI and compare the performance of the proposed heuristic with the optimal performance. We illustrate the conditions in which the procedure is working well and comment on its practical applicability.

Suggested Citation

  • Jakšič Marko & Rusjan Borut, 2009. "Heuristic Approach to Inventory Control with Advance Capacity Information," Organizacija, Sciendo, vol. 42(4), pages 129-136, July.
    • Handle: RePEc:vrs:organi:v:42:y:2009:i:4:p:129-136:n:3
    DOI: 10.2478/v10051-009-0010-5
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/v10051-009-0010-5
    Download Restriction: no
    File URL: https://libkey.io/10.2478/v10051-009-0010-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. A. Federgruen & P. Zipkin, 1986. "An Inventory Model with Limited Production Capacity and Uncertain Demands II. The Discounted-Cost Criterion," Mathematics of Operations Research, INFORMS, vol. 11(2), pages 208-215, May.
    2. Srinivas Bollapragada & Thomas E. Morton, 1999. "Myopic Heuristics for the Random Yield Problem," Operations Research, INFORMS, vol. 47(5), pages 713-722, October.
    3. A. Federgruen & P. Zipkin, 1986. "An Inventory Model with Limited Production Capacity and Uncertain Demands I. The Average-Cost Criterion," Mathematics of Operations Research, INFORMS, vol. 11(2), pages 193-207, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Qi Feng & J. George Shanthikumar, 2018. "Supply and Demand Functions in Inventory Models," Operations Research, INFORMS, vol. 66(1), pages 77-91, 1-2.
    2. M. Jakšič & J.C. Fransoo & T. Tan & A.G. de Kok & B. Rusjan, 2011. "Inventory management with advance capacity information," Naval Research Logistics (NRL), John Wiley & Sons, vol. 58(4), pages 355-369, June.
    3. Peter Berling & Danja R. Sonntag, 2022. "Inventory control in production–inventory systems with random yield and rework: The unit‐tracking approach," Production and Operations Management, Production and Operations Management Society, vol. 31(6), pages 2628-2645, June.
    4. Dimitris Bertsimas & Ioannis Ch. Paschalidis, 2001. "Probabilistic Service Level Guarantees in Make-to-Stock Manufacturing Systems," Operations Research, INFORMS, vol. 49(1), pages 119-133, February.
    5. Kutzner, Sarah C. & Kiesmüller, Gudrun P., 2013. "Optimal control of an inventory-production system with state-dependent random yield," European Journal of Operational Research, Elsevier, vol. 227(3), pages 444-452.
    6. Woonghee Tim Huh & Ganesh Janakiraman & Mahesh Nagarajan, 2016. "Capacitated Multiechelon Inventory Systems: Policies and Bounds," Manufacturing & Service Operations Management, INFORMS, vol. 18(4), pages 570-584, October.
    7. Sari, Kazim, 2010. "Exploring the impacts of radio frequency identification (RFID) technology on supply chain performance," European Journal of Operational Research, Elsevier, vol. 207(1), pages 174-183, November.
    8. James A. Rappold & John A. Muckstadt, 2000. "A computationally efficient approach for determining inventory levels in a capacitated multiechelon production‐distribution system," Naval Research Logistics (NRL), John Wiley & Sons, vol. 47(5), pages 377-398, August.
    9. Y. Boulaksil & J. C. Fransoo & T. Tan, 2017. "Capacity reservation and utilization for a manufacturer with uncertain capacity and demand," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 39(3), pages 689-709, July.
    10. Refik Güllü, 1996. "On the value of information in dynamic production/inventory problems under forecast evolution," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(2), pages 289-303, March.
    11. Gullu, Refik, 1998. "Base stock policies for production/inventory problems with uncertain capacity levels," European Journal of Operational Research, Elsevier, vol. 105(1), pages 43-51, February.
    12. Awi Federgruen & Min Wang, 2015. "Inventory Models with Shelf-Age and Delay-Dependent Inventory Costs," Operations Research, INFORMS, vol. 63(3), pages 701-715, June.
    13. Paul Zipkin, 2008. "On the Structure of Lost-Sales Inventory Models," Operations Research, INFORMS, vol. 56(4), pages 937-944, August.
    14. Lee, Jun-Yeon & Schwarz, Leroy B., 2009. "Leadtime management in a periodic-review inventory system: A state-dependent base-stock policy," European Journal of Operational Research, Elsevier, vol. 199(1), pages 122-129, November.
    15. Ioannis Ch. Paschalidis & Yong Liu, 2003. "Large Deviations-Based Asymptotics for Inventory Control in Supply Chains," Operations Research, INFORMS, vol. 51(3), pages 437-460, June.
    16. Berling, Peter & Eng-Larsson, Fredrik, 2017. "Environmental implications of transport contract choice - capacity investment and pricing under volume and capacity contracts," European Journal of Operational Research, Elsevier, vol. 261(1), pages 129-142.
    17. Xiuli Chao & Xiting Gong & Cong Shi & Chaolin Yang & Huanan Zhang & Sean X. Zhou, 2018. "Approximation Algorithms for Capacitated Perishable Inventory Systems with Positive Lead Times," Management Science, INFORMS, vol. 64(11), pages 5038-5061, November.
    18. van Houtum, G. J. & Inderfurth, K. & Zijm, W. H. M., 1996. "Materials coordination in stochastic multi-echelon systems," European Journal of Operational Research, Elsevier, vol. 95(1), pages 1-23, November.
    19. Jian Yang & Zhaoqiong Qin, 2007. "Capacitated Production Control with Virtual Lateral Transshipments," Operations Research, INFORMS, vol. 55(6), pages 1104-1119, December.
    20. Katia C. Frank & Hyun‐Soo Ahn & Rachel Q. Zhang, 2009. "Inventory policies for a make‐to‐order system with a perishable component and fixed ordering cost," Naval Research Logistics (NRL), John Wiley & Sons, vol. 56(2), pages 127-141, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:organi:v:42:y:2009:i:4:p:129-136:n:3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.