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A characterization of optimal base-stock levels for a multistage serial supply chain

Berling, Peter LU and Martínez-De-Albéniz, Victor (2016) In Naval Research Logistics 63(1). p.32-46
Abstract

In this article, we present a multistage model to optimize inventory control decisions under stochastic demand and continuous review. We first formulate the general problem for continuous stages and use a decomposition solution approach: since it is never optimal to let orders cross, the general problem can be broken into a set of single-unit subproblems that can be solved in a sequential fashion. These subproblems are optimal control problems for which a differential equation must be solved. This can be done easily by recursively identifying coefficients and performing a line search. The methodology is then extended to a discrete number of stages and allows us to compute the optimal solution in an efficient manner, with a competitive... (More)

In this article, we present a multistage model to optimize inventory control decisions under stochastic demand and continuous review. We first formulate the general problem for continuous stages and use a decomposition solution approach: since it is never optimal to let orders cross, the general problem can be broken into a set of single-unit subproblems that can be solved in a sequential fashion. These subproblems are optimal control problems for which a differential equation must be solved. This can be done easily by recursively identifying coefficients and performing a line search. The methodology is then extended to a discrete number of stages and allows us to compute the optimal solution in an efficient manner, with a competitive complexity.

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Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
inventory, multi-echelon, unit decomposition
in
Naval Research Logistics
volume
63
issue
1
pages
15 pages
publisher
John Wiley & Sons
external identifiers
  • scopus:84960460651
  • wos:000373074400003
ISSN
0894-069X
DOI
10.1002/nav.21675
language
English
LU publication?
yes
id
442bc0e5-b93c-4ad5-a042-9c2e5d97a6f8
date added to LUP
2016-09-20 07:59:40
date last changed
2017-04-12 13:56:11
@article{442bc0e5-b93c-4ad5-a042-9c2e5d97a6f8,
  abstract     = {<p>In this article, we present a multistage model to optimize inventory control decisions under stochastic demand and continuous review. We first formulate the general problem for continuous stages and use a decomposition solution approach: since it is never optimal to let orders cross, the general problem can be broken into a set of single-unit subproblems that can be solved in a sequential fashion. These subproblems are optimal control problems for which a differential equation must be solved. This can be done easily by recursively identifying coefficients and performing a line search. The methodology is then extended to a discrete number of stages and allows us to compute the optimal solution in an efficient manner, with a competitive complexity.</p>},
  author       = {Berling, Peter and Martínez-De-Albéniz, Victor},
  issn         = {0894-069X},
  keyword      = {inventory,multi-echelon,unit decomposition},
  language     = {eng},
  month        = {02},
  number       = {1},
  pages        = {32--46},
  publisher    = {John Wiley & Sons},
  series       = {Naval Research Logistics},
  title        = {A characterization of optimal base-stock levels for a multistage serial supply chain},
  url          = {http://dx.doi.org/10.1002/nav.21675},
  volume       = {63},
  year         = {2016},
}