Inventory control with advance ordering and expedited replenishments

Mazhar Arikan, Murat Erkoc

Research output: Chapter in Book/Report/Conference proceedingConference contribution


We study a finite horizon multi-stage inventory control problem where demand is stochastic and nonstationary. The demand distribution across periods is a function of a demand signal which is random at the beginning of the planning horizon. The firm has the option of contracting its supplies in advance of realization of the market signal to benefit from price discounts. It is also possible for the firm to replenish its inventories during the selling season by paying higher spot market prices after the market signal is observed. Our research is motivated by applications in cruise line industry where contracts are made before the final number of bookings is realized. Based on the finalized bookings and consumption rates, additional purchases can be made at intermediate stops with higher prices. We investigate optimal combination of advance contracting and expedited replenishment policies under such settings.

Original languageEnglish
Title of host publicationIIE Annual Conference and Exposition 2005
StatePublished - Dec 1 2005
EventIIE Annual Conference and Exposition 2005 - Atlanta, GA, United States
Duration: May 14 2005May 18 2005


OtherIIE Annual Conference and Exposition 2005
Country/TerritoryUnited States
CityAtlanta, GA


  • Advance contracts
  • Base stock policies
  • Demand signal
  • Dynamic programming
  • Inventory management

ASJC Scopus subject areas

  • Engineering(all)


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