94%-Effective Policies for a Two-Stage Serial Inventory System with Stochastic Demand

A two-stage inventory system is considered where Poisson demand occurs at Stage 1, and Stage 1 replenishes its inventory from Stage 2, which in turn orders from an outside supplier with unlimited stock. Each shipment, either to Stage 2 or to Stage 1, incurs a fixed setup cost. Under the assumption that the supply leadtime at Stage 2 is zero, we characterize a simple heuristic policy whose long-run average cost is guaranteed to be within 6% of optimality, i.e., a 94%-effective policy. The paper also provides heuristic policies for more general inventory systems and reports computational results.

• 저널Management Science · 45(12) · 1679–1696
• 토픽Supply Chain and Inventory Management · Management Information Systems
• DOI10.1287/mnsc.45.12.1679
• 저자Fangruo Chen