We consider dynamic pricing and replenishment decisions for a production/inventory system modeled by a make-to-stock queue. The potential customer demand is generated by a MarkovModulated (environment-dependent) Poisson process and the actual demand depends on the price offered at the time of the transaction. Using a Markov Decision Process framework, we obtain results on the structure of the o...

This study extends a mathematical model that integrates the location, allocation, inventory replenishment and routing decisions simultaneously. To cope with inherent uncertainty of parameters, we implement a continuous-time Markov process and derive the performance measures of the system. Using the obtained results, the problem is formulated as a mixed integer nonlinear programing model (MINLP)...

Abstract—The need for holistic modeling efforts that satisfy the increasing supply chain enterprise at a strategic level has been clearly recognized by industry first and by academia recently. In order to increase the profitability of the entire chain, strategic decision-makers need comprehensive models to guide them to make efficient decision. The determination of optimal network configuration...

This paper addresses the problem of inventory penalty pricing under the risk-neutral valuation principle. The underlying production-inventory system has a constant replenishment rate and a compound renewal demand stream (i.e., iid demand interarrival times are independent of iid demand sizes), and is subject to underage and overage penalties. Our pricing approach treats the penalties as a serie...

Managing inventory in distribution systems involves taking decisions on the quantity of inventory to be placed at different stages so that a desired customer service level can be achieved at minimum cost. In this paper, we present the case of the distribution system of an Indian FMCG company, which despite having centralized control takes replenishment decisions based on local stock information...

In a multi-item inventory system, given the order cycle lengths and unit volumes of the items, the determination of the replenishment times (i.e. “cycle offsets”) of items, so as to minimize the resources needed to store the items, is known as the inventory cycle offsetting problem. In this paper we show that so long as the cycle times and inventory unit volumes satisfy certain mild constraints...

We consider a supply chain in which the underlying demand process can be described in a linear state space form. Inventory is managed at various points of the chain (members), based on local information that each member observes and continuously updates. The key feature of our model is that it takes into account the ability of the members to observe subsets of the underlying state vector, and a...

In this paper, the traditional inventory lot-size model is extended to allow not only for general partial backlogging rate but also for inflation. The assumptions of equal cycle length and constant shortage length imposed in the model developed by Moon et al. [Moon, I., Giri, B.C., Ko, B., 2005. Economic order quantity models for ameliorating/deteriorating items under inflation and time discoun...

Generally, the derivation of an inventory policy requires the knowledge of the underlying demand distribution. Unfortunately, in many settings such as retail, demand is not completely observable in a direct way or inventory records may be inaccurate. A variety of factors, including the potential inaccuracy of inventory records, motivate retailers to seek replenishment policies with a fixed orde...

This study develops an optimization model to integrate facility location and inventory control for a three-level distribution network consisting of a supplier, multiple distribution centers (DCs), and multiple retailers. The integrated model addressed in this study simultaneously determines three types of decisions: (1) facility location (optimal number, location, and size of DCs); (2) allocati...