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Finite horizon stochastic inventory problem with dual sourcing: Near myopic and heuristics bounds

Author

Listed:
  • Ali Cheaitou

    (Industrial Engineering and Management Department, College of Engineering - American University of Sharjah)

  • Christian van Delft

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

Abstract

We consider a class of multi-periodic non-stationary stochastic single-product inventory planning problems where two procurement modes can be used at each period: a first order with immediate delivery and a second order with a single-period delivery delay. Clearly, the slow delivery mode is less expensive than the fast. We develop a discounted backlog model, with non-stationary procurement, inventory holding and backlog penalty costs proportional to the ordered quantities, inventory levels and number of backlogged units respectively. The demands are defined as non-stationary and independent random variables. We partially characterize the optimal ordering policy structure and we develop theoretical bounds and heuristic approximations for this optimal policy. Efficiency of these approximations is illustrated via extensive numerical experiments.

Suggested Citation

  • Ali Cheaitou & Christian van Delft, 2013. "Finite horizon stochastic inventory problem with dual sourcing: Near myopic and heuristics bounds," Post-Print hal-00989433, HAL.
    • Handle: RePEc:hal:journl:hal-00989433
    DOI: 10.1016/j.ijpe.2012.05.027
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    Citations

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    Cited by:

    1. Cheaitou, Ali & Cheaytou, Rima, 2019. "A two-stage capacity reservation supply contract with risky supplier and forecast updating," International Journal of Production Economics, Elsevier, vol. 209(C), pages 42-60.
    2. Roni, Mohammad S. & Eksioglu, Sandra D. & Jin, Mingzhou & Mamun, Saleh, 2016. "A hybrid inventory policy with split delivery under regular and surge demand," International Journal of Production Economics, Elsevier, vol. 172(C), pages 126-136.
    3. Han, Guanghua & Dong, Ming & Liu, Shaoxuan, 2014. "Yield and allocation management in a continuous make-to-stock system with demand upgrade substitution," International Journal of Production Economics, Elsevier, vol. 156(C), pages 124-131.
    4. Cheaitou, Ali & Larbi, Rim & Al Housani, Bashayer, 2019. "Decision making framework for tender evaluation and contractor selection in public organizations with risk considerations," Socio-Economic Planning Sciences, Elsevier, vol. 68(C).
    5. 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.
    6. Roni, Mohammad S. & Jin, Mingzhou & Eksioglu, Sandra D., 2015. "A hybrid inventory management system responding to regular demand and surge demand," Omega, Elsevier, vol. 52(C), pages 190-200.

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