A simple heuristic for computing non-stationary inventory policies based on function approximation

Kilic O. A., TARIM Ş. A.

European Journal of Operational Research, cilt.316, sa.3, ss.899-905, 2024 (SCI-Expanded) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 316 Sayı: 3
  • Basım Tarihi: 2024
  • Doi Numarası: 10.1016/j.ejor.2024.02.016
  • Dergi Adı: European Journal of Operational Research
  • Derginin Tarandığı İndeksler: Science Citation Index Expanded (SCI-EXPANDED), Scopus, International Bibliography of Social Sciences, ABI/INFORM, Applied Science & Technology Source, Business Source Elite, Business Source Premier, Compendex, Computer & Applied Sciences, EconLit, INSPEC, Public Affairs Index, zbMATH, Civil Engineering Abstracts
  • Sayfa Sayıları: ss.899-905
  • Anahtar Kelimeler: Approximation, Heuristic, Inventory, Non-stationary demand, Stochastic
  • Hacettepe Üniversitesi Adresli: Evet

Özet

We consider a finite-horizon periodic-review inventory system with fixed replenishment costs that faces non-stationary demands. The structure of the optimal control policy for this system has long been known. However, finding optimal policy parameters requires solving a large-scale stochastic dynamic program. To circumvent this, we devise a recursion-free approximation for the cost function of the problem. This translates into an efficient and effective heuristic to compute policy parameters that significantly outperforms earlier heuristics. Our approach is easy-to-understand and easy-to-use as it follows by elementary methods of shortest paths and convex minimization.