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Title: | On the stochastic inventory problem under order capacity constraints |
Authors: | Rossi, R Chen, Z Tarim, SA |
Keywords: | inventory;stochastic lot sizing;order capacity;modified multi-(s, S) policy |
Issue Date: | 5-Jul-2023 |
Publisher: | Elsevier |
Citation: | Rossi, R., Chen, Z. and Tarim, S.A. (2023) 'On the stochastic inventory problem under order capacity constraints', European Journal of Operational Research, 312 (2), pp. 541 - 555. doi: 10.1016/j.ejor.2023.06.045. |
Abstract: | We consider the single-item single-stocking location stochastic inventory system under a fixed ordering cost component. A long-standing problem is that of determining the structure of the optimal control policy when this system is subject to order quantity capacity constraints; to date, only partial characterisations of the optimal policy have been discussed. An open question is whether a policy with a single continuous interval over which ordering is prescribed is optimal for this problem. Under the so-called “continuous order property” conjecture, we show that the optimal policy takes the modified multi- form. Moreover, we provide a numerical counterexample in which the continuous order property is violated, and hence show that a modified multi- policy is not optimal in general. However, in an extensive computational study, we show that instances violating the continuous order property do not surface, and that the plans generated by a modified multi- policy can therefore be considered, from a practical standpoint, near-optimal. Finally, we show that a modified policy also performs well in this empirical setting. |
URI: | https://bura.brunel.ac.uk/handle/2438/29261 |
DOI: | https://doi.org/10.1016/j.ejor.2023.06.045 |
ISSN: | 0377-2217 |
Other Identifiers: | ORCiD: Roberto Rossi https://orcid.org/0000-0001-7247-1010 ORCiD: Zhen Chen https://orcid.org/0000-0002-1619-3017 ORCiD: S. Armagan Tarim https://orcid.org/0000-0001-5601-3968 |
Appears in Collections: | Brunel Business School Research Papers |
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FullText.pdf | Copyright © 2023 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY license ( https://creativecommons.org/licenses/by/4.0/ ) | 1.69 MB | Adobe PDF | View/Open |
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