Allocation policies and cost approximations for multilocation inventory systems |
| |
Authors: | Awi Federgruen Paul Zipkin |
| |
Affiliation: | Graduate School of Business, Columbia University, New York, New York 10027 |
| |
Abstract: | Consider a central depot that supplies several locations experiencing random demands. Periodically, the depot may place an order for exogenous supply. Orders arrive after a fixed leadtime, and are then allocated among the several locations. Each allocation reaches its destination after a further delay. We consider the special case where the penalty-cost/holding-cost ratio is constant over the locations. Several approaches are given to approximate the dynamic program describing the problem. Each approach provides both a near-optimal order policy and an approximation of the optimal cost of the original problem. In addition, simple but effective allocation policies are discussed. |
| |
Keywords: | |
|
|