Supply chain inventory optimization with two customer classes in discrete time

In this paper we consider a single-item inventory system where two demand classes with different service requirements are satisfied from a common inventory. A critical level, reorder point, order quantity or (s, q, k) policy is in use. The time axis is divided into discrete time units, which is a common characteristic of many real-life supply-chain processes. The inventory process within the lead time of a replenishment order is modelled as a sequence of (1) an ordinary renewal process and (2) two alternating renewal processes. Approximations are developed for the demand class-specific fill rates and the probability distribution of the waiting time of low priority customer orders. This waiting time distribution is used for the inventory allocation in a two-stage supply chain.     

Production-inventory systems in stochastic environment and stochastic lead times

We consider a production-inventory system where the production and demand rates are modulated by a finite state Continuous Time Markov Chain (CTMC). When the inventory position (inventory on hand – backorders+inventory on order) falls to a reorder point r, we place an order of size q from an external supplier. We consider the case of stochastic leadtimes, where the leadtimes are i.i.d. exponential(μ) random variables, and orders may or may not be allowed to cross. We derive the distribution of the inventory level, and analyze the long run holding, backlogging, and ordering cost rate per unit time. We use simulation to study the sensitivity of the system to the distribution of the lead times.     

On the use of phase‐type distributions for inventory management with supply disruptions

Maintaining the continuity of operations becomes increasingly important for systems that are subject to disruptions due to various reasons. In this paper, we study an inventory system operating under a (q, r) policy, where the supply can become inaccessible for random durations. The availability of the supply is modeled by assuming a single supplier that goes through ON and OFF periods of stochastic duration, both of which are modeled by phase‐type distributions (PTD). We provide two alternative representations of the state transition probabilities of the system, one with integral and the other employing Kolmogorov differential equations. We then use an efficient formulation for the analytical model that gives the optimal policy parameters and the long‐run average cost. An extensive numerical study is conducted, which shows that OFF time characteristics have a bigger impact on optimal policy parameters. The ON time characteristics are also important for critical goods if disasters can happen. Copyright © 2011 John Wiley & Sons, Ltd.     

PRODUCTION INVENTORY SYSTEM WITH RANDOM SUPPLY INTERRUPTIONS STATUE AND RANDOM LEAD TIMES

This article analyzes a continuous-review inventory system with random supply interruptions and random lead time which may be interrupted by a random number of supplier’s OFF periods. The inventory with constant demand rate is managed by a (r; q1, q2, ··· , qm) policy and supplies from an unreliable sole supplier. By renewal theory and matrix Geometric method, the long-run average cost function is obtained and some important properties of the function are proved. Furthermore, performance of the inventory is derived.     

Multi-item inventory control with full truckloads: A comparison of aggregate and individual order triggering

In this paper, we consider the stochastic joint replenishment problem in an environment where transportation costs are dominant and full truckloads or full container loads are required. One replenishment policy, taking into account capacity restrictions of the total order volume, is the so-called QS policy, where replenishment orders are placed to raise the individual inventory positions of all items to their order-up-to levels, whenever the aggregate inventory position drops below the reorder level. We first provide a method to compute the policy parameters of a QS policy such that item target service levels can be met, under the assumption that demand can be modeled as a compound renewal process. The approximation formulas are based on renewal theory and are tested in a simulation study which reveals good performance. Second, we compare the QS policy with a simple allocation policy where replenishment orders are triggered by the individual inventory positions of the items. At the moment when an individual inventory position drops below its item reorder level, a replenishment order is triggered and the total vehicle capacity is allocated to all items such that the expected elapsed time before the next replenishment order is maximized. In an extensive simulation study it is illustrated that the QS policy outperforms this allocation policy since it results in lower inventory levels for the same service level. Although both policies lead to similar performance if items are identical, it can differ substantially if the item characteristics vary.     

On the value of customer information for an independent supplier in a continuous review inventory system

We consider the inventory control problem of an independent supplier in a continuous review system. The supplier faces demand from a single customer who in turn faces Poisson demand and follows a continuous review (R, Q) policy. If no information about the inventory levels at the customer is available, reviews and ordering are usually carried out by the supplier only at points in time when a customer demand occurs. It is common to apply an installation stock reorder point policy. However, as the demand faced by the supplier is not Markovian, this policy can be improved by allowing placement of orders at any point in time. We develop a time delay policy for the supplier, wherein the supplier waits until time t after occurrence of the customer demand to place his next order. If the next customer demand occurs before this time delay, then the supplier places an order immediately. We develop an algorithm to determine the optimal time delay policy. We then evaluate the value of information about the customer’s inventory level. Our numerical study shows that if the supplier were to use the optimal time delay policy instead of the installation stock policy then the value of the customer’s inventory information is not very significant.     

Constructions of （q,K, λ, t,Q） almost difference families

The concept of a （q, k, λ, t） almost dltterence tamlly （ADF） nas oeen introduced and studied by C. Ding and J. Yin as a useful generalization of the concept of an almost difference set. In this paper, we consider, more generally, （q, K,λ, t, Q）-ADFs, where K = {k1, k2,.…, kr} is a set of positive integers and Q = （q1,q2,... ,qr） is a given block-size distribution sequence. A necessary condition for the existence of a （q, K, λ, t, Q）-ADF is given, and several infinite classes of （q, K, A, t, Q）-ADFs are constructed.     

Inventory control with indivisible units of stock transfer

We consider an infinite horizon, single item inventory model with backorders and a fixed lead time. Demand is stationary stochastic and review is periodic. Inventory may only be replenished in multiples of a fixed package size q but demands may be of any size. Ordering costs are linear and combined holding and shortage costs can be expressed as a convex function of the inventory position. The control policy is defined as (s, S, q), where an order is placed if the inventory position falls to or below s and the order size is the largest multiple of q which results in the inventory position not exceeding S. The parameters s and S are restricted to be multiples of q. The objective is to find the control policy that minimizes the long run average cost per unit time. The optimal solution procedure requires renewal theory and a structured search. Fortunately, a heuristic based on the ‘quantized ordering’ approach of Zheng and Chen provides solutions that are near optimal over a broad range of parameter values.     

Regular subgraphs of almost regular graphs

Suppose every vertex of a graph G has degree k or k + 1 and at least one vertex has degree k + 1. It is shown that if k ≥ 2q ? 2 and q is a prime power then G contains a q-regular subgraph (and hence an r-regular subgraph for all r < q, r ≡ q (mod 2)). It is also proved that every simple graph with maximal degree Δ ≥ 2q ? 2 and average degree $\text{d > (}\text{(2q ? 2)}\text{(2q ? 1)}\text{)(Δ + 1)}$, where q is a prime power, contains a q-regular subgraph (and hence an r-regular subgraph for all r < q, r ≡ q (mod 2)). These results follow from Chevalley's and Olson's theorems on congruences.     

Sourcing from suppliers with random yield for price-dependent demand

We study a multi-period inventory planning problem. In each period, the firm under consideration can source from two possibly unreliable suppliers for a price-dependent demand. Our analysis suggests that the optimal procurement policy is neither a simple reorder-point policy nor a complex one without any structure, as previous studies suggest. Instead, we prove the existence of a reorder point for each supplier. No order is placed to that supplier for any inventory level above the reorder point and a positive order is issued to that supplier for almost every inventory level below the reorder point. We characterize conditions under which the optimal policy reveals monotone response to changes in the inventory level. Furthermore, two special cases of our model are examined in detail to demonstrate how our analysis generalizes a number of well-known results in the literature.     

Uniform distribution of inventory positions in two-echelon periodic review systems with batch-ordering policies and interdependent demands

We consider a two-level inventory system in which there are one supplier and multiple retailers. The retailers face stochastic, interdependent customer demands. Each location employs a periodic-review (R,nQ), or lot-size reorder point, inventory policy. We show that each location's inventory positions are stationary and the stationary distribution is uniform and independent of any other's.     

A two-level supply chain with partial backordering and approximated Poisson demand

We consider a two-level supply chain with a number of identical, independent ‘retailers’ at the lower echelon and a single supplier at the upper echelon controlled by continuous review inventory policy (R, Q). Each retailer experiences Poisson demand with constant transportation times. We assume constant lead time for replenishing supplier orders from an external warehouse to the supplier and unsatisfied retailer orders are backordered in the supplier. We assume that the unsatisfied demand is partially backordered in the identical retailers. The partially backordering policy is implemented in the identical retailers using an explicit control parameter ‘b’ which limits the maximum number of backorders allowed to be accumulated during the lead time. We develop an approximate cost function to find optimal reorder points for given batch sizes in all installations, the optimal value of b in the identical retailers and the related accuracy is assessed through simulation.     

Monotonicity properties of a class of stochastic inventory systems

We consider inventory systems which are governed by an (r,q) or (r,nq) policy. We derive general conditions for monotonicity of the three optimal policy parameters, i.e., the optimal reorder level, order quantity and order-up-to level, as well as the optimal cost value, as a function of the various model primitives, be it cost parameters or complete cost rate functions or characteristics of the demand and leadtime processes. These results are obtained as corollaries from a few general theorems, with separate treatment given to the case where the policy parameters are continuous variables and that where they need to be restricted to integer values. The results are applied both to standard inventory models and to those with general shelf age and delay dependent inventory costs.     

Generalized vector-valued paranormed sequence space using modulus function

In this paper we introduce a generalized vector-valued paranormed sequence space N_p(E_k,Δ^m,f,s) using modulus function f, where p=(p_k) is a bounded sequence of positive real numbers such that inf_kp_k>0,(E_k,q_k) is a sequence of seminormed spaces with E_k+1⊆E_k for each k ∈ N and s?0. We have also studied sequence space N_p(E_k,Δ^m,f^r,s), where f^r=f°f°f°,…,f (r-times composition of f with itself) and r∈N={1,2,3,…}. Results regarding completeness, K-space, normality, inclusion relations etc. are derived. Further, a study of multiplier of the set N_p(E_k,f,s) is also made by choosing (E_k,‖·‖_k) as sequence of normed algebras.     

Inventory control using a service constraint on the expected customer order waiting time

In this paper an analytical model is presented which permits the determination of the minimal inventory reorder point subject to (a) a maximum specified expected customer order waiting time or (b) a maximum specified probability of a customer order waiting more than a predetermined time span. The probability distribution of the customer order waiting time is determined for an arbitrary demand distribution (e.g. normal, gamma or exponential) and under stochastic replenishment lead time conditions by use of arguments from renewal theory. The results established can be used for the customer-oriented control of inventory policy as well as for the analysis of multi-echelon inventory systems.     

Simple approximations for the reorder point in periodic and continuous review (s, S) inventory systems with service level constraints

In this paper we consider a general class of (s, S) inventory systems including periodic review and continuous review systems. We allow for stochastic lead times for replenishment orders provided that the probability of orders crossing in time is negligible for the relevant (s, S) control rules. In accordance with common practice we emphasize on service level constraints rather than assuming given stockout costs. In particular we consider the service measure requiring that a specified fraction of the demand is met directly from stock on hand. The purpose of this paper is to present practically useful approximations for the recorder point s such that the required service level is achieved. By a simple and direct approach, a unifying treatment of the general class of (s, S) inventory systems considered is given. We obtain for the first time tractable approximations for the continuous review (s, S) inventory system with undershoots of the reorder point. Also, we discuss 2-moments approximations obtained by fitting normal respectively gamma distributions to the empirical demand distributions. Extensive numerical experience with the approximations is reported, including results about the sensitivity of the reorder point to the higher moments of the demand distributions.     

A Multiple Reorder Point Inventory Policy

This paper discusses the development and application of a multiple reorder inventory policy which can be stated as follows: reorder an optimal lot size Q when inventory (stock on hand) falls to R, R-Q, R-2Q,..., R-NQ; where R is the reorder level. If demands cause the inventory to fall below two reorder levels, say a jump from R+ ? to R-2Q+?′ where ? and ?′ < Q, an order for 2Q is placed. The policy is a form of (S,q) policy where the maximum stock level S = R + Q. The system is of particular value in cases where the coefficient of variation of lead time demand μ _l (μ _l = σ _l /λ _l )is large (say >0·5) and continuous inventory records are maintained. Tables, charts and nomographs to simplify clerical tasks can be obtained quite readily. In this formulation R and Q are not independent factors as in the usual Wilson formulation, but are obtained by minimizing a single cost functional subject to the constraint of a specified risk of out-of-stock condition or a specified level of service (Galliher and Simmond, 1957), (Morse et al., 1959). The particular application concerns the raw material inventories of a manufacturer of metal pressings who is required to offer “immediate service”. The demand distribution during the lead time closely approximates the exponential distribution, and lead times are constant for each raw material. The application of the multiple reorder policy results in a 30 to 35 per cent reduction in inventory for a 95 per cent service level. Measures of sensitivity and response are obtained, and the mean number of shortages is expressed in closed form. The policy is compared with the Wilson policy and shown to be more “effective” in that it results in lower inventories and a smaller number of orders for the case considered.     

Monomial Base for Little q-Schur Algebra uk(2, r) at Even Roots of Unity

Let uk(2, r) be a little q-Schur algebra over k, where k is a field containing an l-th primitive root ε of 1 with l ≥ 4 even, the author constructs a certain monomial base for little q-Schur algebra uk(2, r).     

Decomposition of an M/D/r·k queue with FIFO into k Ek/D/r queues with FIFO

It is observed that the queuing system M/D/r·k with FIFO has the same waiting time distribution as the queuing system E_k/D/r with FIFO. Using this simple equivalence we can apply numerical methods and tables for M/Dn to solve E_k/D/r.     

Contact Elements on Fibered Manifolds

For every product preserving bundle functor T ^μ on fibered manifolds, we describe the underlying functor of any order (r, s, q), s ≥ r ≤ q. We define the bundle K_k,l^r,s,q YK_{k,l}^{r,s,q} Y of (k, l)-dimensional contact elements of the order (r, s, q) on a fibered manifold Y and we characterize its elements geometrically. Then we study the bundle of general contact elements of type μ. We also determine all natural transformations of K_k,l^r,s,q YK_{k,l}^{r,s,q} Y into itself and of T( K_k,l^r,s,q Y )T\left( {K_{k,l}^{r,s,q} Y} \right) into itself and we find all natural operators lifting projectable vector fields and horizontal one-forms from Y to K_k,l^r,s,q YK_{k,l}^{r,s,q} Y .