We consider the optimal control of an assemble-to-order (ATO) system with m components, a single end-product, and n customer classes. Demand from each class occurs continuously over time according to a Poisson process. Components are produced in separate production facilities, each with a finite production rate and exponentially distributed production times. Components can be stocked ahead of d...

We consider a two-stage production-inventory system with demand at the downstream stage and returns at each stage. We characterize the structure of the optimal policy which is a complex state-dependent Base-stock policy. We also investigate four classes of policies : Fixed buffer, Base-stock echelon, Kanban and Half-optimal. We compare the performances of these policies and exhibit that the max...

We study the optimal policy for a serial inventory system under periodic review when excess demand at the retailer (i.e., the most downstream stage) is lost. We focus on “high service level environments” (i.e., systems where the cost of a lost sale is high compared to inventory holding costs). These environments are typical of products whose margins are high relative to their holding costs. Whe...

We present a periodic review inventory model with multiple delivery modes and demand forecast updates. We generalize the notion of the base-stock policy for inventory system with multiple delivery modes. While base-stock policies are optimal for one or two consecutive delivery modes, it is not so otherwise. For multiple consecutive delivery modes, we show that only the fastest two modes have op...

We study a joint inventory and pricing problem in a single-stage system with a positive lead time. We consider both additive and multiplicative demand forms. This problem is, in general, intractable due to its computational complexity. We develop a simple heuristic that resolves this issue. The heuristic involves a myopic pricing policy that generates each period’s price as a function of the in...

This paper is motivated by the inventory planning issues faced by a manufacturer of a digital projector. The seller faces demand from two sources: new demand, and demand to replace failed items under warranty. We model this setting as a multi-period single product inventory problem where the new demand in different periods are independent and the demand for replacing failed items under warranty...

In this paper, we discuss the replenishment decision of seasonal products in a two-echelon distribution system consisting of a supplier and multiple retailers. Due to long manufacturing lead time, the supplier orders its entire stock for the season well in advance. The retailers, on the other hand, can replenish their inventory from the supplier throughout the season as demand realizes. Demand ...

This paper considers a two-echelon distribution system which consists of a single warehouse serving N (possibly non-identical) retailers that face discrete stochastic demand of the customers. The warehouse orders from an exogenous supplier with ample stock. Orders arrive at the warehouse after a fixed leadtime. The warehouse satisfies, if possible, the replenishment requests from the retailers....

Introduction The periodic-review inventory control problem with lost-sales and positive lead times is one of the most fundamental yet notoriously difficult problems in the theory of inventory management (see Zipkin (2000)). The model assumes that unmet demand at the end of each period is lost, rather than being backlogged and carried over to the next period. For example, in many retail applicat...

Adaptive base stock policy is a well-known tool for managing inventories in non-stationary demand environments. This paper presents empirical tests of this policy using aggregate, firmlevel data. First, we extend a single-item adaptive base stock policy in previous literature to a multi-item case. Second, we transform the policy derived for the multi-item case to a regression model that relates...