Asymptotic Optimality of Base-Stock Policies for Perishable Inventory Systems
| Autor: | Xiting Gong, Xiuli Chao, Jinzhi Bu |
|---|---|
| Rok vydání: | 2023 |
| Předmět: |
History
Asymptotic analysis Mathematical optimization Polymers and Plastics Heuristic (computer science) Computer science Strategy and Management Management Science and Operations Research Industrial and Manufacturing Engineering Rate of convergence Business and International Management Constant (mathematics) Lead time Average cost Stock (geology) Curse of dimensionality |
| Zdroj: | Management Science. 69:846-864 |
| ISSN: | 1526-5501 0025-1909 |
| DOI: | 10.1287/mnsc.2022.4400 |
| Popis: | We consider periodic review perishable inventory systems with a fixed product lifetime. Unsatisfied demand can be either lost or backlogged. The objective is to minimize the long-run average holding, penalty, and outdating cost. The optimal policy for these systems is notoriously complex and computationally intractable because of the curse of dimensionality. Hence, various heuristic replenishment policies are proposed in the literature, including the base-stock policy, which raises the total inventory level to a constant in each review period. Whereas various studies show near-optimal numerical performances of base-stock policies in the classic system with zero replenishment lead time and a first-in-first-out issuance policy, the results on their theoretical performances are very limited. In this paper, we first focus on this classic system and show that a simple base-stock policy is asymptotically optimal when any one of the product lifetime, demand population size, unit penalty cost, and unit outdating cost becomes large; moreover, its optimality gap converges to zero exponentially fast in the first two parameters. We then study two important extensions. For a system under a last-in-first-out or even an arbitrary issuance policy, we prove that a simple base-stock policy is asymptotically optimal with large product lifetime, large unit penalty costs, and large unit outdating costs, and for a backlogging system with positive lead times, we prove that our results continue to hold with large product lifetime, large demand population sizes, and large unit outdating costs. Finally, we provide a numerical study to demonstrate the performances of base-stock policies in these systems. This paper was accepted by Victor Martinez de Albéniz, operations management. Funding: J. Bu was partially supported by a Hong Kong Polytechnic University Start-up Fund for New Recruits [Grant P0039585]. X. Gong was partially supported by a Chinese University of Hong Kong (CUHK) Direct Grant [Grant 4057147] and the Hong Kong Research Grants Council (RGC) General Research Fund [Grant CUHK14500120]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2022.4400 . |
| Databáze: | OpenAIRE |
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