Effective inventory control policies with a minimum order quantity and batch ordering

Han, Zhu; Liu, Xing; Chen, Youhua

doi:10.1016/j.ijpe.2015.06.008

Cited by 19 publications

(9 citation statements)

References 17 publications

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“…For example, Zhu et al. ( 2015 ) investigate a system with both MinOQ and batch ordering constraints. That is, each time an order is placed, the order quantity must be not only larger than a threshold but also an integral multiple of a specified batch size.…”

Section: Literature Reviewmentioning

confidence: 99%

A simple heuristic policy for stochastic inventory systems with both minimum and maximum order quantity requirements

Han

2022

Ann Oper Res

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In this paper, we consider a periodic-review stochastic inventory system with both minimum and maximum order quantity (MinOQ and MaxOQ, respectively) requirements. In each period, if an order is placed, the order quantity is bounded, at least at the MinOQ and at most the MaxOQ. The optimal policy of such a system is unknown, and even if it exists, it must be quite complicated. We propose a heuristic policy, called the modified ( s , S ) policy, under which whenever the inventory position drops to the reorder point s or below, an order is placed to raise the inventory position as close as possible to the order-up-to level S . Applying a discrete-time Markov chain approach, we are able to compute the system-wide long-run average cost. We provide bounds for the optimal values of s and S and design an efficient algorithm to optimize our proposed policy. In addition, the proposed heuristic policy has excellent performance in our numerical studies. We also measure the impact of some inventory parameters. Supplementary Information The online version supplementary material available at 10.1007/s10479-021-04441-1.

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Section: Literature Reviewmentioning

confidence: 99%

A simple heuristic policy for stochastic inventory systems with both minimum and maximum order quantity requirements

Han

2022

Ann Oper Res

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“…Optimisation of various search engines enables an online store with a large number of products to attract a large number of customers. However, offering a long tail of products delivered by various suppliers may require ordering a quantity of slow moving items that exceeds current demand, due to the minimum order quantity (MOQ) set by the supplier (Zhu et al 2015). For example, a customer may order only one unit, but the MOQ set by a supplier is ten units.…”

Section: Reasons Connected With the Environment Of E-commercementioning

confidence: 99%

The problem of shelf-warmers in electronic commerce: a proposed solution

Chodak

2020

Inf Syst E-Bus Manage

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This paper presents the significant problem of so called shelf-warmers in the environment of electronic commerce. In the first part of the paper, the factors that have led to an increasing stock of shelf-warmers in online stores are discussed. These factors are divided into two groups: those that occur mainly in an online store environment and those not specifically associated with an online environment. One group of factors are related to the large number of items offered in an online store enabled by various models of inventory management (e.g. drop-shipping, 3PL, 4PL), the lack of a need to maintain costly space for the exposition of goods, the heterogeneity of online shoppers and the large number of returns from customers. The other group of factors concern incorrect forecasts of demand, inappropriate inventory control, choice of product assortment, pricing policies and the end of a product's life cycle. The problem of appropriately identifying shelf-warmers is then discussed and an index measuring the tendency of a good to be a shelf-warmer is proposed. Based on this, different methods for dealing with shelf-warmers are outlined in the form of the use of recommendation systems, search engine optimization and social media. The paper then presents an experiment conducted in a real business environment to assess the effectiveness of some of the aforementioned methods. This experiment resulted in the sale of approximately 33% of 160 selected shelf-warmers and over 50% from one group (number 8) where all the suggestions were implemented, within a period of 10 months. The results obtained show that the methods and recommendations proposed may help online stores to deal with the problem of shelf-warmers.

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“…This modified base-stock policy has only one parameter and is easy to implement. Zhu et al [45] studied a single-item periodic-review stochastic inventory system with both minimum order quantity (MOQ) and batch ordering requirements.…”

Section: Moq Requirementmentioning

confidence: 99%

A Two-Echelon Inventory System with a Minimum Order Quantity Requirement

2019

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In this paper, we study a two-echelon inventory system with one warehouse and multiple retailers, under the setting of periodic review and infinite horizon. In each period, retailers replenish their stocks from the warehouse, and the warehouse in turn replenishes from an external supplier. Particularly, as stipulated by the supplier, there is a minimum order quantity (MOQ) requirement for the warehouse. That is, the warehouse must order either none or at least as much as the MOQ. To investigate this system analytically, we assume retailers adopt the base-stock policy, and we design for the warehouse a new heuristic ordering policy, called refined base-stock policy, which conforms to the MOQ requirement. Moreover, in the case of shortages, we assume the warehouse adopts a virtual allocation policy, and therefore the orders for individual units are filled in the same order as the original demands at the retailers. To evaluate the long-run average system cost exactly, we present a position-based cost-accounting scheme, in which the cost associated with each unit is assigned to its first position at the warehouse. We also derive lower and upper bounds of the inventory parameters, facilitating the search for the optimal policy that minimizes the long-run average system cost.

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Effective inventory control policies with a minimum order quantity and batch ordering

Cited by 19 publications

References 17 publications

A simple heuristic policy for stochastic inventory systems with both minimum and maximum order quantity requirements

A simple heuristic policy for stochastic inventory systems with both minimum and maximum order quantity requirements

The problem of shelf-warmers in electronic commerce: a proposed solution

A Two-Echelon Inventory System with a Minimum Order Quantity Requirement

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