We consider a production-inventory system where the production and demand follow Poisson processes whose rates are modulated by an external stochastic environment process. We study two such systems: with and without an external supplier, and show an interesting stochastic decomposition relationship between the steady state distribution of inventory levels in these two systems. We consider the o...

This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. The publisher does not give any warranty express or implied or make any representation that the contents will be complete or accurate or up to date...

In this paper we introduce the optimal solution for a simple and yet practical inventory policy with the important characteristic which eliminates the uncertainty in demand for suppliers. In this new policy which is different from the classical inventory policies, the time interval between any two consecutive orders is fixed and the quantity of each order is one. Assuming the fixed ordering cos...

Brand substitution is common observed phenomenon in daily life. It the decision makers’ economic understanding and potential scheme for business-industries. Also, it provides flexibility management increases ability to control production. This works proposes an integrated supplier–retailer inventory model substitutable products. Two suppliers work not with two different brand products their cor...

The paper deals with the lead-time demand forecasting for inventory management of multiple slow-moving items in the case when the available demand history is very short. Two stochastic models of demand are compared: (i) the first based on the “population-averaged” binomial distribution of requests (the traditional approach); and (ii) the second based on the beta-binomial probability distributio...

The paper deals with the lead-time demand forecasting for inventory management of multiple slow-moving items in the case when the available demand history is very short. Two stochastic models of demand are compared: (i) the first based on the “population-averaged” binomial distribution of requests (the traditional approach); and (ii) the second based on the beta-binomial probability distributio...

a r t i c l e i n f o Keywords: Stochastic dynamic programming Risk-reward heuristic Mean–variance analysis Efficient frontier analysis Inventory management Traditionally inventory management models have focused on risk-neutral decision making with the objective of maximizing the expected rewards or minimizing costs over a specified time horizon. However, for items marked by high demand volatil...

A result in the Bayesian inventory management literature is: If lost sales are not observed, the Bayesian optimal inventory level is larger than the myopic inventory level (one should “stock more” to learn about the demand distribution). This result has been proven in other studies under the assumption that inventory is perishable, so the myopic inventory level is equal to the Bayesian optimal ...