Abstract
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 language | English |
|---|---|
| Title of host publication | IIE Annual Conference and Exposition 2005 |
| State | Published - Dec 1 2005 |
| Event | IIE Annual Conference and Exposition 2005 - Atlanta, GA, United States Duration: May 14 2005 → May 18 2005 |
Other
| Other | IIE Annual Conference and Exposition 2005 |
|---|---|
| Country | United States |
| City | Atlanta, GA |
| Period | 5/14/05 → 5/18/05 |
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Keywords
- Advance contracts
- Base stock policies
- Demand signal
- Dynamic programming
- Inventory management
ASJC Scopus subject areas
- Engineering(all)
Cite this
Inventory control with advance ordering and expedited replenishments. / Arikan, Mazhar; Erkoc, Murat.
IIE Annual Conference and Exposition 2005. 2005.Research output: Chapter in Book/Report/Conference proceeding › Conference contribution
}
TY - GEN
T1 - Inventory control with advance ordering and expedited replenishments
AU - Arikan, Mazhar
AU - Erkoc, Murat
PY - 2005/12/1
Y1 - 2005/12/1
N2 - 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.
AB - 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.
KW - Advance contracts
KW - Base stock policies
KW - Demand signal
KW - Dynamic programming
KW - Inventory management
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UR - http://www.scopus.com/inward/citedby.url?scp=33749263179&partnerID=8YFLogxK
M3 - Conference contribution
AN - SCOPUS:33749263179
BT - IIE Annual Conference and Exposition 2005
ER -