Policies utilizing tactical inventory for service-differentiated customers

We consider a manufacturer serving two customer classes where one wants the item immediately and the second receives a discount to accept a delay. We show that an (S,R,B) base-stock policy is optimal under differentiation and non-differentiation where S, R, and B are the order-up-to, reserve-up-to, and backlog-up-to amounts.     

Inventory placement in acyclic supply chain networks

By adding a set of redundant constraints, and by iteratively refining the approximation, we show that a commercial solver is able to routinely solve moderate-size strategic safety stock placement problems to optimality. The speed-up arises because the solver automatically generates strong flow cover cuts using the redundant constraints.