Abstract
Inventory control implies dynamic decision making. Therefore, dynamic programming seems an appropriate approach to look for order policies. For finite horizon planning, the implementation of service level constraints provides a big challenge. This paper illustrates with small instances the implementation of stochastic dynamic programming (SDP) to derive order policies in a straightforward way for systems with non-stationary demand and service level constraints. The small instances allow to perform a full enumeration of possible policies and show that the SDP derived policies are not necessarily optimal.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsPreview
Unable to display preview. Download preview PDF.
References
Bellman, R., Stanley, L.E.: Functional equations in dynamic programming. Aequationes Mathematicae 17(1), 1–18 (1978)
Bijvank, M., Vis, I.F.A.: Lost-sales inventory systems with a service level criterion. European Journal of Operational Research 220(3), 610–618 (2012)
Burgin, T.A.: The gamma distribution and inventory control. Operational Research Quarterly 26(3), 507–525 (2012)
Chen, F.Y., Krass, D.: Inventory models with minimal service level constraints. European Journal of Operational Research 134(1), 120–140 (2001)
Chopra, S., Meindl, P.: Supply Chain Management: Strategy, Planning, and Operation. Pearson, New Yersey (2010)
van Dijk, D., Hendrix, E.M.T., Haijema, R., Groeneveld, R.A., van Ierland, E.C.: On solving a bi-level stochastic dynamic programming model for analyzing fisheries policies: Fishermen behavior and optimal fish quota. Ecological Modelling 272, 68–75 (2014)
Fries, B.: Optimal ordering policy for a perishable commodity with a fixed lifetime. Operations Research 23(1), 46–61 (1975)
Hendrix, E.M.T., Haijema, R., Rossi, R., Pauls-Worm, K.G.J.: On solving a stochastic programming model for perishable inventory control. In: Murgante, B., Gervasi, O., Misra, S., Nedjah, N., Rocha, A.M.A.C., Taniar, D., Apduhan, B.O. (eds.) ICCSA 2012, Part III. LNCS, vol. 7335, pp. 45–56. Springer, Heidelberg (2012)
van Houtum, G.J., Zijm, W.H.M.: On the relationship between cost and service models for general inventory systems. Statistica Neerlandica 54(2), 127–147 (2000)
Pauls-Worm, K.G.J., Hendrix, E.M.T., Haijema, R., van der Vorst, J.G.A.J.: An MILP approximation for ordering perishable products with non-stationary demand and service level constraints. International Journal of Production Economics 157, 133–146 (2014)
Sobel, M.J., Zhang, R.Q.: Inventory policies for systems with stochastic and deterministic demand. Operations Research 49(1), 157–162 (2001)
Wagner, H.M., Whitin, T.M.: Dynamic version of the economic lot size model. Management Science 5(1), 89–96 (1958)
van Zyl, G.: Inventory control for perishable commodities. Ph.D. thesis, University of North Carolina, Chapel Hill (1964)
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2015 Springer International Publishing Switzerland
About this paper
Cite this paper
Pauls-Worm, K.G.J., Hendrix, E.M.T. (2015). SDP in Inventory Control: Non-stationary Demand and Service Level Constraints. In: Gervasi, O., et al. Computational Science and Its Applications -- ICCSA 2015. ICCSA 2015. Lecture Notes in Computer Science(), vol 9156. Springer, Cham. https://doi.org/10.1007/978-3-319-21407-8_29
Download citation
DOI: https://doi.org/10.1007/978-3-319-21407-8_29
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-21406-1
Online ISBN: 978-3-319-21407-8
eBook Packages: Computer ScienceComputer Science (R0)