• Industrial Engineering and Management Systems
• /
• v.7 no.3
• /
• pp.257-265
• /
• 2008

This paper deals with the joint decisions on pricing and ordering for a monopolistic retailer who sells perishable goods with a fixed lifetime or demand period. The newsvendor-typed problem is formulated as a two-period inventory system where the first period represents the inventory of fresh or new-arrival items and the second period represents the inventory of items that are older but still usable. Demand may be for either fresh items or for somewhat older items that exhibit physical decay or deterioration. The retailer is allowed to adjust the selling price of the deteriorated items in the second period, which stimulates demand and reduces excess season-end or stale inventory. This paper develops a stochastic dynamic programming model that solves the problem of preseason decisions on ordering-pricing and a within-season decision on markdown pricing. We also develop a fixed-price model as a benchmark against the dual-price dynamic model. To illustrate the effect of the dual-price policy on expected profit, we conduct a comparative study between the two models. Extension to a generalized multi-period model is also discussed.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
• /
• v.9 no.2
• /
• pp.81-86
• /
• 2014

In this paper, a jointly optimal group replacement and spare provisioning policy is presented. Most maintenance policies assume that the spare inventory is always available, but in practice the maintenance schedule is affected by the availability of spare inventory. We present a maintenance-inventory model which jointly optimizes the group replacement interval and spare ordering quantity. Group replacement policy is used when a group of units are put in operation simultaneously. The operating fleet is replaced altogether at a predetermined number of units are failed. A sufficient level of spare inventory is carried to perform a number of group replacement. A cost rate expression which considers the group maintenance cost and inventory holding cost is derived and a heuristic method for searching the optimum value of decision variables is suggested. Numerical examples demonstrate the analytical results and the performance of the presented model.

• Journal of the Korea Society for Simulation
• /
• v.12 no.2
• /
• pp.1-11
• /
• 2003

In this paper, we focus an optimal policy focus optimal class of (s, S) inventory control systems. To this end, we use the perturbation analysis and apply a stochastic optimization algorithm to minimize the average cost over a period. We obtain the gradients of objective function with respect to ordering amount S and reorder point s via a combined perturbation method. This method uses the infinitesimal perturbation analysis and the smoothed perturbation analysis alternatively according to occurrences of ordering event changes. Our simulation results indicate that the optimal estimates of s and S obtained from a stochastic optimization algorithm are quite accurate. We consider that this may be due to the estimated gradients of little noise from the regenerative system simulation, and their effect on search procedure when we apply the stochastic optimization algorithm. The directions for future study stemming from this research pertain to extension to the more general inventory system with regard to demand distribution, backlogging policy, lead time, and review period. Another directions involves the efficiency of stochastic optimization algorithm related to searching procedure for an improving point of (s, S).

• Journal of Korean Society for Quality Management
• /
• v.14 no.1
• /
• pp.33-38
• /
• 1986

This paper deals with probabilistic order level inventory system which the quantity ordered at the end of the scheduling period is dependent on lead times. To find an optimal solution, pearson system of distributions is used to approximate the probability density function of the on-order quantity. An example is solved and sensitivity analysis is performed to examine the relation between lead times and the ordering quantity.

• Management Science and Financial Engineering
• /
• v.18 no.1
• /
• pp.21-26
• /
• 2012

Two previous studies that attempted to generalize the deterministic joint pricing-inventory decision model are reevaluated. We prove analytically that even in a single-product environment, the EOQ model with constant priceelastic demand cannot find optimal solutions unless two optimality conditions associated with price elasticity and demand magnitude are satisfied. Due to the inexistence of the general optimality for the problem, demand function and price elasticity must be evaluated and bounded properly to use the methods proposed in the previous studies.

• Proceedings of the Korean Operations and Management Science Society Conference
• /
• 1995.04a
• /
• pp.476-486
• /
• 1995

In this paper, an attempt has been made to revise Raafat' s(1985) results on an inventory model for decaying raw materials and the finished product at a constant rate which was based on Goyal's integrated inventory model for a single product system. This paper is concerned with scheduling the frequencies of order quantity of several different raw materials on a production inventory model. The purpose of this paper is to present a simple method of deciding the frequencies of order quantity of raw materials, in the sense of minimizing the average total cost of the system. We describe on iterative procedure for directly determining near optimal frequencies of order quantity for the raw materials and the associated fundamental cycle time which can be used for constructing the production duration of the finished product. In cases where feasible schedules cannot be constructed using the values from the iterative procedure, the procedure provides a basis for changing the order quantity frequencies and the fundamental cycle time to obtain feasible schedules. An example is given to illustrate the derived results.

• Management Science and Financial Engineering
• /
• v.17 no.2
• /
• pp.1-21
• /
• 2011

This paper considers an integrated inventory-distribution system with a fleet of heterogeneous vehicles employed where a single warehouse distributes a single type of products to many spatially distributed retailers to satisfy their dynamic demands. The problem is to determine order planning at the warehouse, and also vehicle schedules and delivery quantities for the retailers with the objective of minimizing the sum of ordering cost at the warehouse, inventory holding cost at both the warehouse and retailers, and transportation cost. For the problem, we give a Mixed Integer Programming formulation and develop a Lagrangean heuristic procedure for computing lower and upper bounds on the optimal solution value. The Lagrangean dual problem of finding the best Lagrangrean lower bound is solved by subgradient optimization. Computational experiments on randomly generated test problems showed that the suggested algorithm gives relatively good solutions in a reasonable amount of computation time.

• Journal of Korean Society for Quality Management
• /
• v.17 no.1
• /
• pp.116-124
• /
• 1989

A multi-period production-inventory scheduling model, which extends the customary dynamic lot sizing model to the one for deteriorating items, is developed. The amount of deterioration during a period is assumed to be proportional to the on-hand inventory at the end of the period. It is futher assumed that the deterioration rates vary from period to period. In addtion, an expediting cost due to the delay of outstanding order is included and it is allowed to offset the order release date in advance, instead, in order to avoid incurring the cost. Finally, a quasi-WW algorithm corresponding to the Wagar-Whitin algorithm is proposed to obtain the optimal production-inventory schedules.

• Journal of Korean Society for Quality Management
• /
• v.15 no.1
• /
• pp.55-62
• /
• 1987

A stochastic model for an inventory system in which depletion of stock takes place due to random demand as well as random loss of items is studied under the assumption that the intervals between successive unit demands, as well as those between successive unit losses, are independently and identically distributed random variables having negative exponential distribution with respective parameters. We have derived the steady state probability distribution of the net inventory level assuming negative exponential delivery time under the continuous review (S-1, S) inventory policy. Also we have derived the total expected cost expression and necessary conditions to be satisfied for an optimal solution.

• Journal of the Korean Operations Research and Management Science Society
• /
• v.31 no.1
• /
• pp.105-115
• /
• 2006

In this paper, we investigate the problem of minimizing average inventory costs subject to a fill rate constraint in a two-stage serial inventory model with a normally distributed demand. Fill rate is the fraction of demand that is satisfied immediately from on-hand inventory. We first find the lower bounds of base-stock levels in each node by using the exact base-stock level that satisfies a fill rate in a single node model proposed by Sobel. And then, we extensively analyze the system and show that the cost function is convex. Using such convexity and some other useful properties, we can easily find optimal base-stock levels numerically.