Stochastic dynamic programming heuristic for the (R,s,S) policy parameters computation
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Stochastic dynamic programming heuristic for the \((R,s,S)\) policy parameters computation
Stochastic dynamic programming heuristic for the \((R,s,S)\) policy parameters computation
Abstract: The (R, s, S) is a stochastic inventory control policy widely used by practitioners. In an inventory system managed according to this policy, the inventory is reviewed at instant R; if the observed inventory position is lower than the reorder level s an order is placed. The order's quantity is set to raise the inventory position to the order-up-to-level S. This paper introduces a new stochastic dynamic program (SDP) based heuristic to compute the (R, s, S) policy parameters for the non-stationary stochastic lot-sizing problem with backlogging of the excessive demand, fixed order and review costs, and linear holding and penalty costs. In a recent work, Visentin et al. (2021) present an approach to compute optimal policy parameters under these assumptions. Our model combines a greedy relaxation of the problem with a modified version of Scarf's (s, S) SDP. A simple implementation of the model requires a prohibitive computational effort to compute the parameters. However, we can speed up the computations by using K-convexity property and memorisation techniques. The resulting algorithm is considerably faster than the state-of-the-art, extending its adoptability by practitioners. An extensive computational study compares our approach with the algorithms available in the literature.
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Cites work
- A mixed integer programming formulation for the stochastic lot sizing problem with controllable processing times
- An enhanced L-shaped method for optimizing periodic-review inventory control problems modeled via two-stage stochastic programming
- An extended mixed-integer programming formulation and dynamic cut generation approach for the stochastic lot-sizing problem
- Computing non-stationary \((s, S)\) policies using mixed integer linear programming
- Computing optimal \((R, s, S)\) policy parameters by a hybrid of branch-and-bound and stochastic dynamic programming
- Controlling distribution inventory systems with shipment consolidation and compound Poisson demand
- Dynamic lot sizing with random demand and non-stationary costs
- Exact fill rates for (R, s, S) inventory control with gamma distributed demand
- scientific article; zbMATH DE number 3322720 (Why is no real title available?)
- Inventory control
- Nervousness in inventory management: Comparison of basic control rules
- Optimal and simple approximate solutions to a production-inventory system with stochastic and deterministic demand
- Optimal Inventory Policy
- Optimal production and inventory control of multi-class mixed backorder and lost sales demand class models
- Solving a novel inventory location model with stochastic constraints and \((R,s,S)\) inventory control policy
- Strategies for the Probabilistic Lot-Sizing Problem with Service-Level Constraints
- The stochastic lot-sizing problem with quantity discounts
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