Computing the non-stationary replenishment cycle inventory policy under stochastic supplier lead-times

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Rossi R., TARIM Ş. A., HNİCH B., Prestwich S.

INTERNATIONAL JOURNAL OF PRODUCTION ECONOMICS, vol.127, no.1, pp.180-189, 2010 (SCI-Expanded) identifier identifier


In this paper we address the general multi-period production/inventory problem with non-stationary stochastic demand and supplier lead-time under service level constraints. A replenishment cycle policy (R"S") is modeled, where R" is the nth replenishment cycle length and S" is the respective order-up-to-level. We propose a stochastic constraint programming approach for computing the optimal policy parameters. In order to do so, a dedicated global chance-constraint and the respective filtering algorithm that enforce the required service level are presented. Our numerical examples show that a stochastic supplier lead-time significantly affects policy parameters with respect to the case in which the lead-time is assumed to be deterministic or absent. (C) 2010 Elsevier B.V. All rights reserved.