Note: A Simple Heuristic for Serial Inventory Systems with Fixed Order Costs

@article{Shang2008NoteAS,
  title={Note: A Simple Heuristic for Serial Inventory Systems with Fixed Order Costs},
  author={Kevin H. Shang},
  journal={Operations Research},
  year={2008},
  volume={56},
  pages={1039-1043}
}
Consider a continuous-review, serial inventory system with N stages. Material flows from stage N to stage N−1, N−1 to N−2, etc. until stage 1, where stationary compound Poisson demand occurs. Let λ and μ denote the demand rate and the mean of demand size, and D[t] denote the demand over a time interval t. There is a constant leadtime Lj for stage j. Define L̃i = ∑i j=1 Lj . Inventory is controlled by echelon-stock (R, nQ) policies. That is, for each stage j, as soon as the echelon inventory… CONTINUE READING
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