Asymptotic Optimality of Base-Stock Policies for Perishable Inventory Systems

Asymptotic Optimality of Tailored Base-Surge Policies in Dual-Sourcing Inventory Systems

Dual-sourcing inventory systems, in which one supplier is faster (i.e. express) and more costly, while the other is slower (i.e. regular) and cheaper, arise naturally in many real-world supply chains. These systems are notoriously difficult to optimize due to the complex structure of the optimal solution and the curse of dimensionality, having resisted solution for over 40 years. Recently, so-c...

Asymptotic Optimality of Order-Up-To Replenishment Policies for Serial Inventory Systems with Lost Sales

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...

Optimality of Zero-Inventory Policies for Unreliable Manufacturing Systems

Electronic Companion — “ Asymptotic Optimality of Order - Up - To Policies in Lost Sales Inventory Systems ” by Woonghee

Asymptotic Optimality of Order-Up-To Policies in Lost Sales Inventory Systems

We study a single-product single-location inventory system under periodic review, where excess demand is lost and the replenishment lead time is positive. The performance measure of interest is the long run average holding cost and lost sales penalty. For a large class of demand distributions, we show that when the lost sales penalty becomes large compared to the holding cost, the relative diff...