scholarly journals Dynamic Pricing and Production Control of an Inventory System with Remanufacturing

2015 ◽  
Vol 2015 ◽  
pp. 1-8 ◽  
Author(s):  
Chunyan Gao ◽  
Yao Wang ◽  
Liang Xu ◽  
Yi Liao
Keyword(s):  
Dynamic Pricing ◽  
Production Control ◽  
Inventory System ◽  
Base Stock ◽  
Inventory Level ◽  
Optimal Pricing ◽  
Customer Demand ◽  
Threshold Policy ◽  
Base Stock Policy ◽  
Stock Policy

We consider optimal pricing and manufacturing control of a continuous-review inventory system with remanufacturing. Customer demand and product return follow independent Poisson processes. Customer demand is filled by serviceable product, which can be either manufactured or remanufactured from the returned product. The lead times for both manufacturing and remanufacturing are exponentially distributed. The objective is to maximize the expected total discounted profit over an infinite planning horizon. We characterize the structural properties of the optimal policy through the optimality equation. Specifically, the optimal manufacturing policy is a base-stock policy with the base-stock level nonincreasing in the return inventory level. The optimal pricing policy is also a threshold policy, where the threshold level is nonincreasing in the return inventory level.

scholarly journals Joint Pricing and Inventory Replenishment Decisions with Returns and Expediting under Reference Price Effects

2019 ◽  
Vol 2019 ◽  
pp. 1-17
Author(s):  
Yuan Li ◽  
Yumei Hou
Keyword(s):  
Reference Price ◽  
Base Stock ◽  
List Price ◽  
Optimal Pricing ◽  
Threshold Policy ◽  
Inventory Replenishment ◽  
Base Stock Policy ◽  
Price Effects ◽  
Joint Pricing ◽  
Stock Policy

This paper considers a single-item joint pricing and inventory replenishment problem under reference price effects in consecutive T periods. Demands in consecutive periods are sensitive to price and reference price with general demand distribution. At the end of each period, after the demand realization, a firm can return excess stocks to a supplier or place an expediting order to reduce the loss by shortage. Unfilled demands are fully backlogged. In order to maximize the total expected discounted profit with reference price effects the optimal pricing and inventory replenishment policies for regular order and the inventory adjustment decisions for returning/expediting are derived. The optimal replenishment policy for regular order is a base-stock policy, the optimal pricing policy is a base-stock-list-price policy, and the optimal policy for returning/expediting inventory adjustment follows a dual-threshold policy. Furthermore, the analysis of the operational impacts (from the perspective of adding returning/expediting and reference price effects, respectively) is researched. Numerical results also show that considering both returning/expediting and reference price effects is more profitable than considering only one of them.

scholarly journals Optimization and Customer Utilities under Dynamic Lead Time Quotation in an M/M Type Base Stock System

2017 ◽  
Vol 2017 ◽  
pp. 1-10 ◽  
Author(s):  
Koichi Nakade ◽  
Hiroki Niwa
Keyword(s):  
Waiting Time ◽  
Lead Time ◽  
Inventory System ◽  
Base Stock ◽  
Base Stock Policy ◽  
Optimal Policies ◽  
Optimal Dynamic ◽  
System Information ◽  
Lead Time Quotation ◽  
Stock Policy

In a manufacturing and inventory system, information on production and order lead time helps consumers’ decision whether they receive finished products or not by considering their own impatience on waiting time. In Savaşaneril et al. (2010), the optimal dynamic lead time quotation policy in a one-stage production and inventory system with a base stock policy for maximizing the system’s profit and its properties are discussed. In this system, each arriving customer decides whether he/she enters the system based on the quoted lead time informed by the system. On the other hand, the customer’s utility may be small under the optimal quoted lead time policy because the actual lead time may be longer than the quoted lead time. We use a utility function with respect to benefit of receiving products and waiting time and propose several kinds of heuristic lead time quotation policies. These are compared with optimal policies with respect to both profits and customer’s utilities. Through numerical examples some kinds of heuristic policies have better expected utilities of customers than the optimal quoted lead time policy maximizing system’s profits.

scholarly journals A Two-Echelon Inventory System with a Minimum Order Quantity Requirement

2019 ◽  
Vol 11 (18) ◽  
pp. 5059
Author(s):  
Huaxiao Shen ◽  
Tian Tian ◽  
Han Zhu
Keyword(s):  
Inventory System ◽  
Base Stock ◽  
Order Quantity ◽  
Minimum Order ◽  
System Cost ◽  
Base Stock Policy ◽  
Long Run ◽  
Minimum Order Quantity ◽  
Average System ◽  
Stock Policy

In this paper, we study a two-echelon inventory system with one warehouse and multiple retailers, under the setting of periodic review and infinite horizon. In each period, retailers replenish their stocks from the warehouse, and the warehouse in turn replenishes from an external supplier. Particularly, as stipulated by the supplier, there is a minimum order quantity (MOQ) requirement for the warehouse. That is, the warehouse must order either none or at least as much as the MOQ. To investigate this system analytically, we assume retailers adopt the base-stock policy, and we design for the warehouse a new heuristic ordering policy, called refined base-stock policy, which conforms to the MOQ requirement. Moreover, in the case of shortages, we assume the warehouse adopts a virtual allocation policy, and therefore the orders for individual units are filled in the same order as the original demands at the retailers. To evaluate the long-run average system cost exactly, we present a position-based cost-accounting scheme, in which the cost associated with each unit is assigned to its first position at the warehouse. We also derive lower and upper bounds of the inventory parameters, facilitating the search for the optimal policy that minimizes the long-run average system cost.

Optimality of Base Stock Policy under Unknown Demand Distributions: New Results and a New Method

2021 ◽  
Author(s):  
Alain Bensoussan ◽  
Suresh Sethi ◽  
Abdoulaye Thiam ◽  
Janos Turi
Keyword(s):  
Base Stock ◽  
New Method ◽  
Base Stock Policy ◽  
Stock Policy

scholarly journals Validating Virtual Safety Stock Effectiveness through Simulation

10.5772/56859 ◽  
2013 ◽  
Vol 5 ◽  
pp. 41 ◽  
Author(s):  
Maria Elena Nenni ◽  
Massimiliano M. Schiraldi
Keyword(s):  
Service Level ◽  
Inventory System ◽  
Time Interval ◽  
Common Condition ◽  
Simple Method ◽  
Safety Stock ◽  
Safety Stocks ◽  
Base Stock Policy ◽  
Stock Policy ◽  
Business To Business

As a means of avoiding stock-outs, safety stocks play an important role in achieving customer satisfaction and retention. However, traditional safety stock theory is based on the assumption of the immediate delivery of the ordered products, which is not a common condition in business-to-business contexts. Virtual safety stock theory was conceived to raise the service level by exploiting the potential time interval in the order-to-delivery process. Nevertheless, its mathematical complexity prevented this technique from being widely adopted in the industrial world. In this paper, we present a simple method to test virtual safety stock effectiveness through simulation in an inventory system using a base stock policy with periodic reviews and backorders. This approach can be useful for researchers as well as practitioners who want to model the behaviour of an inventory system under uncertain conditions and verify the opportunity for setting up a virtual safety stock on top of, or instead of, the traditional physical safety stock.

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