As a means of avoiding stock‐outs, safety stocks play an important role in achieving customer satisfaction and retention. However, traditional safety stock theory is based on the assumption of the immediate delivery of the ordered products, which is not a common condition in business‐to‐business contexts. Virtual safety stock theory was conceived to ...

In this paper, we consider an adaptive base-stock policy for a single-item inventory system, where the demand process is nonstationary. In particular, the demand process is an integrated moving average process of order (0, 1, 1), for which an exponential-weighted moving average provides the optimal forecast. For the assumed control policy we characterize the inventory random variable and use th...

We consider an assembly system with multiple stages, multiple items, and multiple customer classes. The system consists of m production facilities, each producing a different item. Items are produced in variable batch sizes, one batch at a time, with exponentially distributed batch production times. Demand from each class takes place continuously over time according to a compound Poisson proces...

We consider a single-stage inventory system supplying external demands and receiving stocks from an ample supply. Time is divided into periods of …xed length; a period can be a day or a week depending on the situation. In each period, demands arrive and are either …lled or backlogged. The system operates under a general periodic-review base-stock policy. Under this policy, the inventory positio...

In this paper we consider the problem of a firm that faces a stochastic (Poisson) demand and must replenish from a market in which prices fluctuate, such as a commodity market. We describe the price evolution as a continuous stochastic process and we focus on commonly used processes suggested by the financial literature, such as the geometric Brownian motion and the Ornstein-Uhlenbeck process. ...

We consider N-stage serial production/distribution systems with stationary demand at the most downstream stage. First, we study classical Clark-Scarf model with both average cost and discounted cost criteria. The optimal echelon base-stock levels are obtained in terms of only probabilistic distributions of leadtime demand. This analysis yields a novel approach for developing bounds and simple h...

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...

Most inventory researches assume that the production level can be fluctuated arbitrarily. However, in many firms, large fluctuation in production levels may be very costly. This paper addresses the coordinated pricing and inventory control problem in a smoothing production system, in which the production level is constrained between a maximum and a minimum level in each period and the price can...