Monday, 13:45 - 14:10 h, Room: MA 144


Ali Randa
Static-dynamic uncertainty strategy for a single-item stochastic inventory control problem

Coauthors: Mustafa Kemal Doğru, Cem İyigün, Ulas Ozen


We consider a single-stage inventory system facing non-stationary stochastic demand of the customers in a finite planning horizon. Motivated by practice, the replenishment times need to be determined and frozen once and for all at the beginning of the horizon while decision on the exact replenishment quantities can be deferred until the replenishment time. This operating scheme is referred as a static-dynamic uncertainty strategy in the literature. We consider dynamic fixed/variable cost of ordering, linear holding costs as well as dynamic penalty costs, and upper/lower limits on order quantities. We prove that the optimal ordering policy is a base stock policy. We develop heuristics for computing the optimal policy parameters for longer planning horizons because the optimal ordering periods and the associated base stock levels need exponentially exhaustive search based on dynamic programming. We then evaluate the efficiency of our heuristics by numerical examples. We also investigate the NP hardness of the problem considering the computational time required with the size of the problem.


Talk 2 of the contributed session Mon.2.MA 144
"Production, inventory and project management" [...]
Cluster 22
"Stochastic optimization" [...]


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