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A CONTINUOUS REVIEW MODEL WITH GENERAL SHELF AGE AND DELAY-DEPENDENT INVENTORY COSTS
Journal article   Peer reviewed

A CONTINUOUS REVIEW MODEL WITH GENERAL SHELF AGE AND DELAY-DEPENDENT INVENTORY COSTS

Awi Federgruen and Min Wang
Probability in the engineering and informational sciences, v 29(4), pp 507-525
01 Oct 2015

Abstract

Engineering Engineering, Industrial Mathematics Operations Research & Management Science Physical Sciences Science & Technology Statistics & Probability Technology
We analyze a continuous review inventory model with the marginal carrying cost of a unit of inventory given by an increasing function of its shelf age and the marginal delay cost of a backlogged demand unit by an increasing function of its delay duration. We show that, under a minor restriction, an (r, q)-policy is optimal when the demand process is a renewal process, and a state dependent (r, q)-policy is optimal when the demand is a Markov-modulated renewal process. We also derive various monotonicity properties for the optimal policy parameters r* and r* + q*.

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Collaboration types
Domestic collaboration
Web of Science research areas
Engineering, Industrial
Operations Research & Management Science
Statistics & Probability
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