A Heuristic for Triggering Emergency Orders in an Inventory System
(2007) In European Journal of Operational Research 176(2). p.880-891- Abstract
- This paper considers a single-echelon inventory system with a warehouse facing compound Poisson customer demand. Normally the warehouse replenishes from an outside supplier according to a continuous review reorder point policy. However, it is also possible to use emergency orders. Such orders incur additional costs but have a much shorter lead time. We consider standard holding and backorder costs as well as ordering costs. A heuristic decision rule for triggering emergency orders is suggested. The decision rule minimizes the expected costs under the assumption that there is only a single possibility for an emergency replenishment, but the rule is used repeatedly as a heuristic. Given a certain reorder point policy for normal... (More)
- This paper considers a single-echelon inventory system with a warehouse facing compound Poisson customer demand. Normally the warehouse replenishes from an outside supplier according to a continuous review reorder point policy. However, it is also possible to use emergency orders. Such orders incur additional costs but have a much shorter lead time. We consider standard holding and backorder costs as well as ordering costs. A heuristic decision rule for triggering emergency orders is suggested. The decision rule minimizes the expected costs under the assumption that there is only a single possibility for an emergency replenishment, but the rule is used repeatedly as a heuristic. Given a certain reorder point policy for normal replenishments, our decision rule will always reduce the expected costs. A simulation study illustrates that the suggested technique performs well under different conditions. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/629426
- author
- Axsäter, Sven LU
- organization
- publishing date
- 2007
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- stochastic, emergency supply, inventory control
- in
- European Journal of Operational Research
- volume
- 176
- issue
- 2
- pages
- 880 - 891
- publisher
- Elsevier
- external identifiers
-
- wos:000241709800014
- scopus:33749582283
- ISSN
- 0377-2217
- DOI
- 10.1016/j.ejor.2005.09.002
- language
- English
- LU publication?
- yes
- id
- 0581ff9e-728a-4337-92c1-c43727fb4787 (old id 629426)
- date added to LUP
- 2016-04-01 11:34:30
- date last changed
- 2023-01-02 20:22:30
@article{0581ff9e-728a-4337-92c1-c43727fb4787,
abstract = {{This paper considers a single-echelon inventory system with a warehouse facing compound Poisson customer demand. Normally the warehouse replenishes from an outside supplier according to a continuous review reorder point policy. However, it is also possible to use emergency orders. Such orders incur additional costs but have a much shorter lead time. We consider standard holding and backorder costs as well as ordering costs. A heuristic decision rule for triggering emergency orders is suggested. The decision rule minimizes the expected costs under the assumption that there is only a single possibility for an emergency replenishment, but the rule is used repeatedly as a heuristic. Given a certain reorder point policy for normal replenishments, our decision rule will always reduce the expected costs. A simulation study illustrates that the suggested technique performs well under different conditions.}},
author = {{Axsäter, Sven}},
issn = {{0377-2217}},
keywords = {{stochastic; emergency supply; inventory control}},
language = {{eng}},
number = {{2}},
pages = {{880--891}},
publisher = {{Elsevier}},
series = {{European Journal of Operational Research}},
title = {{A Heuristic for Triggering Emergency Orders in an Inventory System}},
url = {{http://dx.doi.org/10.1016/j.ejor.2005.09.002}},
doi = {{10.1016/j.ejor.2005.09.002}},
volume = {{176}},
year = {{2007}},
}