We study a periodic-review inventory system with multiple capacitated suppliers. These suppliers have different lead times and unit costs, and suppliers with shorter lead times charge higher unit costs. As the optimal ordering policy is unknown and expected to be complicated, we propose a multi-index base-stock (MIBS) policy for the system based on n tailored inventory positions. Orders are placed with each supplier according to a modified base-stock policy. We analyze the policy's system dynamics and establish separability properties of the optimal policy parameters. We also provide a simulation-based optimization procedure for the policy. Because the procedure involves an exhaustive search across n − 1 parameters, we construct a heuristic for computing near-optimal policy parameters. We numerically demonstrate the performance of the MIBS policy and the effectiveness of the heuristic. The results show that the performance of the MIBS policy is very close to that of the dynamic programming policy and that the performance of the heuristic is close to the optimal MIBS policy, with much faster computation. We also explore the performance of the MIBS policy when the number of sources is increased and find that increasing the number of sources means decreasing the average cost, while the marginal returns of adding a supplier diminish. Importantly, given sufficient capacity, by carefully selecting two of the suppliers-often the fastest and the slowest-it is possible to achieve an adequate balance between cost efficiency and responsiveness.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.