Optimal Policies for a Capacitated Two-Echelon Inventory System

Parker, Rodney P.; Kapuściński, Roman

doi:10.1287/opre.1040.0131

Cited by 81 publications

(82 citation statements)

References 28 publications

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“…Proposition 1 (Parker and Kapuscinski (2004): Corollary 1(b) and Remark 2) Let E nt be the echelon n inventory position at the start of period t. Assume that E n1 − E (n−1)1 ≤ l n · C. Then, any policy that leads to a state where…”

Section: Sequence Of Eventsmentioning

confidence: 99%

“…The only result that has been proved about the structure of the optimal policy for a serial system with capacities is due to Parker and Kapuscinski (2004). They consider a two echelon serial system of the type we described earlier assuming the lead time between L 3 and L 2 is one period and assuming the lead time between L 2 and L 1 is an arbitrary, deterministic integer.…”

Section: Develops a Cost Evaluation Techniquementioning

confidence: 99%

See 1 more Smart Citation

A Decomposition Approach for a Class of Capacitated Serial Systems

Janakiraman

Muckstadt

2009

Operations Research

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We study a class of two echelon, serial systems with identical ordering capacities or limits for both echelons. For the case where the lead time to the upstream echelon is one period, the optimality of state-dependent, modified echelon base-stock policies is proved using a decomposition approach. For the case where the upstream lead time is two periods, we introduce a new class of policies called "two-tier, base-stock policies," and prove their optimality. Some insight about the inventory control problem in N echelon, serial systems with identical capacities at all stages and arbitrary lead times everywhere is also provided. We argue that a generalization of two-tier, base-stock policies, which we call "multi-tier, base-stock policies," are optimal for these systems; we also provide a bound on the number of parameters required to specify the optimal policy.

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Section: Sequence Of Eventsmentioning

confidence: 99%

Section: Develops a Cost Evaluation Techniquementioning

confidence: 99%

A Decomposition Approach for a Class of Capacitated Serial Systems

Janakiraman

Muckstadt

2009

Operations Research

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“…Parker and Kapuscinski (2004) also analyze a two-stage serial system, and show that a modified echelon base-stock (MEBS) policy is optimal, when the tightest capacity constraint is at the downstream stage and there is a single period lead-time at the upstream stage. For these assumptions the MEBS policy is the same as the censored ordering…”

Section: Literature Reviewmentioning

confidence: 99%

Strategic Safety-Stock Placement in Supply Chains with Capacity Constraints

Graves

Schoenmeyr

2016

M&SOM

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We generalize the guaranteed-service (GS) model for safety stock placement in supply chains to include capacity constraints. We first examine the guaranteed-service model for a capacitated single-stage system with bounded demand. We characterize the optimal inventory policy, which depends on the entire demand history. Due to this complexity, we develop a heuristic, namely a constant base-stock policy with censored ordering. This is an order-up-to policy but with its replenishment orders censored by the capacity constraint. We refer to this heuristic as the modified constant base-stock policy (MCBS). We use a numerical experiment to compare the performance of the heuristic policy to the optimal policy. We find that the performance of the heuristic relative to the optimal policy improves with a tighter capacity constraint. We also observe that the performance of the heuristic itself can sometimes be improved by tightening the capacity constraint. We then use the results for a single-stage system to model a multi-stage serial system that operates with a constant base-stock policy with censored ordering, i.e., a MCBS policy. We show how to adapt the existing dynamic programming algorithm for the unconstrained case to solve for the safety stock locations and base-stock levels in a capacitated serial system. We describe how to extend this model to other supply chain topologies. We report on numerical tests for serial systems, and find that the best MCBS policy in a capacitated system can outperform the best constant base-stock policy in an identical but uncapacitated system.

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“…The analysis of multi-echelon inventory systems has a long history, studies on inventory theory are mainly in two aspects, one is establishing inventory model under the different conditions andassumptions, and another is using reasonable method to solve the problem of inventory optimization. In the aspect of inventory model, Andersson & Melchiors studied the two-echelon inventory model with lost sales [1] , 2001; Chiang & Monahan established the dual-channel supply chain model [2] , 2005; Dong & Lee researched a serial multi-echelon inventory system with time-correlated demand [3] , 2003; Mitra analyzed a two-echelon inventory system with returns [4] , 2009; Parker & Kapuscinski present a optimization model for a capacitated two-echelon inventory system [5] . In this paper, considering the system spare parts' structure, which is divided into two levels, the multi-echelon support evaluation model for system spare parts is researched.…”

Section: Introductionmentioning

confidence: 99%

Spares Inventory Optimization Based on System Availability

Wang¹,

Chen²,

Tao³

2015

Advances in Computer Science Research

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Abstract.To the actual problem of the equipment support engineering, the system spare parts are divided into two levels, and based on the METRIC theory, the multi-echelon support evaluation model for system spare parts is established. The multi-echelon system support degree is used as the optimization target while the cost is taken as the restriction, and the margin analysis method is applied to inventory project optimization. In a given example,the optimization result is consistent with the basic principle, which can supply decision assistance for equipment support personal to design a reasonable project.

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Optimal Policies for a Capacitated Two-Echelon Inventory System

Cited by 81 publications

References 28 publications

A Decomposition Approach for a Class of Capacitated Serial Systems

A Decomposition Approach for a Class of Capacitated Serial Systems

Strategic Safety-Stock Placement in Supply Chains with Capacity Constraints

Spares Inventory Optimization Based on System Availability

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