Determination of an order-up-to policy in the stochastic economic lot scheduling model

S.R. Smits, M. Wagner, A.G. Kok, de

Research output: Contribution to journalArticleAcademicpeer-review

12 Citations (Scopus)
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Abstract

We consider a production–inventory problem with compound renewal item demand. The model consists of stockpoints, one for each item, controlled according to (R,S)-policies and one machine which replenishes them. The replenishment orders are produced with a fixed rate on the machine with significant setup times and costs, which are stochastic and sequence dependent. The time between the release and the production of the replenishment order is called the waiting time. We develop analytical approximations for the first two moments of this waiting time, the order-up-to levels and the average physical inventory levels for all stockpoints, given the target fill rates. These analytical approximations allows for a quick evaluation of the waiting time which is important when optimization of the system is considered.
Original languageEnglish
Pages (from-to)377-389
JournalInternational Journal of Production Economics
Volume90
Issue number3
DOIs
Publication statusPublished - 2004

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