IDEAS home Printed from https://ideas.repec.org/a/wsi/apjorx/v33y2016i04ns0217595916500305.html
   My bibliography  Save this article

Stochastic Periodic-Review Models with Duration- and Quantity-Dependent Inventory Costs: Properties and Approximations

Author

Listed:
  • Tal Avinadav

    (Department of Management, Bar-Ilan University, Ramat-Gan 52900, Israel)

Abstract

In this paper, we formulate a stochastic periodic-review inventory model with lead-time that considers both duration- and quantity-dependent inventory costs, and show that the optimality equation has the same format as the standard newsvendor problem with a modified demand distribution. We suggest (i) an approximation of the optimal order-up-to level, based on discretization of the inventory cost accounting, and (ii) two heuristic formulas, based on the two-moment normal approximation of the modified demand distribution, and on an approximated deterministic model. We evaluate the performances of these formulas using a Brownian motion demand process under different scenarios, and discuss their advantages and disadvantages.

Suggested Citation

  • Tal Avinadav, 2016. "Stochastic Periodic-Review Models with Duration- and Quantity-Dependent Inventory Costs: Properties and Approximations," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 33(04), pages 1-25, August.
    • Handle: RePEc:wsi:apjorx:v:33:y:2016:i:04:n:s0217595916500305
    DOI: 10.1142/S0217595916500305
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0217595916500305
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S0217595916500305?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nils Rudi & Harry Groenevelt & Taylor R. Randall, 2009. "End-of-Period vs. Continuous Accounting of Inventory-Related Costs," Operations Research, INFORMS, vol. 57(6), pages 1360-1366, December.
    2. Chen, Fangruo & Zheng, Yu-Sheng, 1993. "Inventory models with general backorder costs," European Journal of Operational Research, Elsevier, vol. 65(2), pages 175-186, March.
    3. Avinadav, Tal & Herbon, Avi & Spiegel, Uriel, 2014. "Optimal ordering and pricing policy for demand functions that are separable into price and inventory age," International Journal of Production Economics, Elsevier, vol. 155(C), pages 406-417.
    4. Kevin H. Shang & Sean X. Zhou, 2010. "Optimal and Heuristic Echelon ( r, nQ, T ) Policies in Serial Inventory Systems with Fixed Costs," Operations Research, INFORMS, vol. 58(2), pages 414-427, April.
    5. Kaj Rosling, 2002. "Inventory Cost Rate Functions with Nonlinear Shortage Costs," Operations Research, INFORMS, vol. 50(6), pages 1007-1017, December.
    6. Avinadav, Tal & Herbon, Avi & Spiegel, Uriel, 2013. "Optimal inventory policy for a perishable item with demand function sensitive to price and time," International Journal of Production Economics, Elsevier, vol. 144(2), pages 497-506.
    7. R. Bellman & I. Glicksberg & O. Gross, 1955. "On the Optimal Inventory Equation," Management Science, INFORMS, vol. 2(1), pages 83-104, October.
    8. Avinadav, Tal & Henig, Mordecai I., 2015. "Exact accounting of inventory costs in stochastic periodic-review models," International Journal of Production Economics, Elsevier, vol. 169(C), pages 89-98.
    9. Tal Avinadav & Teijo Arponen, 2009. "An Eoq Model For Items With A Fixed Shelf-Life And A Declining Demand Rate Based On Time-To-Expiry Technical Note," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 26(06), pages 759-767.
    10. Pentico, David W. & Drake, Matthew J., 2011. "A survey of deterministic models for the EOQ and EPQ with partial backordering," European Journal of Operational Research, Elsevier, vol. 214(2), pages 179-198, October.
    11. Uday S. Rao, 2003. "Properties of the Periodic Review (R, T) Inventory Control Policy for Stationary, Stochastic Demand," Manufacturing & Service Operations Management, INFORMS, vol. 5(1), pages 37-53, February.
    12. Yu-Sheng Zheng, 1992. "On Properties of Stochastic Inventory Systems," Management Science, INFORMS, vol. 38(1), pages 87-103, January.
    13. Kevin H. Shang & Sean X. Zhou & Geert-Jan van Houtum, 2010. "Improving Supply Chain Performance: Real-Time Demand Information and Flexible Deliveries," Manufacturing & Service Operations Management, INFORMS, vol. 12(3), pages 430-448, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Han-Wen Tuan & Kuo-Chen Hung & Gino K. Yang, 2021. "Inventory Model with Fixed Shelf Life under Generalized Non-Increasing Demand," Mathematics, MDPI, vol. 9(21), pages 1-15, October.

    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. Avinadav, Tal & Henig, Mordecai I., 2015. "Exact accounting of inventory costs in stochastic periodic-review models," International Journal of Production Economics, Elsevier, vol. 169(C), pages 89-98.
    2. Tal Avinadav, 2015. "Continuous accounting of inventory costs with Brownian-motion and Poisson demand processes," Annals of Operations Research, Springer, vol. 229(1), pages 85-102, June.
    3. Lagodimos, A.G. & Skouri, K. & Christou, I.T. & Chountalas, P.T., 2018. "The discrete-time EOQ model: Solution and implications," European Journal of Operational Research, Elsevier, vol. 266(1), pages 112-121.
    4. Avinadav, Tal, 2020. "The effect of decision rights allocation on a supply chain of perishable products under a revenue-sharing contract," International Journal of Production Economics, Elsevier, vol. 225(C).
    5. Awi Federgruen & Min Wang, 2013. "Monotonicity properties of a class of stochastic inventory systems," Annals of Operations Research, Springer, vol. 208(1), pages 155-186, September.
    6. Konstantaras, I. & Skouri, K. & Lagodimos, A.G., 2019. "EOQ with independent endogenous supply disruptions," Omega, Elsevier, vol. 83(C), pages 96-106.
    7. Lagodimos, A.G. & Christou, I.T. & Skouri, K., 2012. "Computing globally optimal (s,S,T) inventory policies," Omega, Elsevier, vol. 40(5), pages 660-671.
    8. Qinan Wang & Sven Axsäter, 2013. "Fixed‐interval joint‐replenishment policies for distribution systems with multiple retailers and stochastic demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 60(8), pages 637-651, December.
    9. Hanukov, Gabi & Avinadav, Tal & Chernonog, Tatyana & Yechiali, Uri, 2020. "A service system with perishable products where customers are either fastidious or strategic," International Journal of Production Economics, Elsevier, vol. 228(C).
    10. Tal Avinadav & Tatyana Chernonog & Yael Lahav & Uriel Spiegel, 2017. "Dynamic pricing and promotion expenditures in an EOQ model of perishable products," Annals of Operations Research, Springer, vol. 248(1), pages 75-91, January.
    11. K. Skouri, 2018. "An EOQ model with backlog-dependent demand," Operational Research, Springer, vol. 18(2), pages 561-574, July.
    12. Taleizadeh, Ata Allah & Tafakkori, Keivan & Thaichon, Park, 2021. "Resilience toward supply disruptions: A stochastic inventory control model with partial backordering under the base stock policy," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    13. Avinadav, Tal & Levy, Priel, 2022. "Value of information in a mobile app supply chain under hidden or known information superiority," International Journal of Production Economics, Elsevier, vol. 248(C).
    14. Avinadav, Tal & Chernonog, Tatyana & Perlman, Yael, 2015. "The effect of risk sensitivity on a supply chain of mobile applications under a consignment contract with revenue sharing and quality investment," International Journal of Production Economics, Elsevier, vol. 168(C), pages 31-40.
    15. Chernonog, Tatyana, 2020. "Inventory and marketing policy in a supply chain of a perishable product," International Journal of Production Economics, Elsevier, vol. 219(C), pages 259-274.
    16. Chernonog, Tatyana & Avinadav, Tal, 2019. "Pricing and advertising in a supply chain of perishable products under asymmetric information," International Journal of Production Economics, Elsevier, vol. 209(C), pages 249-264.
    17. Han-Wen Tuan & Kuo-Chen Hung & Gino K. Yang, 2021. "Inventory Model with Fixed Shelf Life under Generalized Non-Increasing Demand," Mathematics, MDPI, vol. 9(21), pages 1-15, October.
    18. Hanukov, Gabi & Avinadav, Tal & Chernonog, Tatyana & Yechiali, Uri, 2019. "Performance improvement of a service system via stocking perishable preliminary services," European Journal of Operational Research, Elsevier, vol. 274(3), pages 1000-1011.
    19. Hanukov, Gabi, 2022. "Improving efficiency of service systems by performing a part of the service without the customer's presence," European Journal of Operational Research, Elsevier, vol. 302(2), pages 606-620.
    20. Lau, Amy Hing Ling & Lau, Hon-Shiang, 2008. "An improved (Q, R) formulation when the stockout cost is incurred on a per-stockout basis," International Journal of Production Economics, Elsevier, vol. 111(2), pages 421-434, February.

    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:wsi:apjorx:v:33:y:2016:i:04:n:s0217595916500305. 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: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/apjor/apjor.shtml .

    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.