Myopic Inventory Policies in Continuous Inventory Systems with Emergency Orders
نویسندگان
چکیده
A make-to-order environment requires flexibility in the supply chain to facilitate fast response. Timely supply deliveries can be achieved in a cost-effective manner by having a portfolio of suppliers, or a portfolio of contracts with a single supplier, with different lead times and associated costs. In this paper we address the inventory management of such a system and evaluate the savings associated with having the option to pay a premium for a quicker response time. We introduce a myopic base-stock policy that uses the exact timing of the outstanding orders to decide whether or not to place an emergency order. Our computational results show that the myopic policy outperforms heuristics proposed in the literature. 1 2004 NSF Design, Service and Manufacturing Grantees and Research Conference/SMU Dallas, Texas
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