Abstract
This study presents power-of-two policies for a serial inventory system with constant demand rate and incremental quantity discounts at the most upstream stage. It is shown that an optimal solution is nested and follows a zero-inventory ordering policy. To prove the effectiveness of power-of-two policies, a lower bound on the optimal cost is obtained. A policy that has a cost within 6% of the lower bound is developed for a fixed base planning period. For a variable base planning period, a 98% effective policy is provided. An extension is included for a system with price dependent holding costs.
Original language | English (US) |
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Pages (from-to) | 583-587 |
Number of pages | 5 |
Journal | Naval Research Logistics |
Volume | 54 |
Issue number | 5 |
DOIs | |
State | Published - Aug 2007 |
All Science Journal Classification (ASJC) codes
- Modeling and Simulation
- Ocean Engineering
- Management Science and Operations Research