Lower Bounds for Multi-Echelon Stochastic Inventory Systems

We establish lower bounds on the minimum cost of managing certain production-distribution networks with setup costs at all stages and stochastic demands. These networks include serial, assembly, and one-warehouse multi-retailer systems. We obtain the bounds through novel cost-allocation schemes. We evaluate the bounds' performance for one-warehouse multi-retailer systems by comparing them with simple, heuristic policies. The bounds are quite tight for systems with a small number of retailers. We also present simplified proof of known optimality results for serial and assembly systems.

• 저널Management Science · 40(11) · 1426–1443
• 토픽Advanced Queuing Theory Analysis · Management Information Systems
• DOI10.1287/mnsc.40.11.1426
• 저자Fangruo Chen, Yu‐Sheng Zheng