An Optimization of(Q,r)Inventory Policy Based on Health Care Apparel Products with Compound Poisson Demands

Addressing the problems of a health care center which produces tailor-made clothes for specific people, the paper proposes a single product continuous review model and establishes an optimal policy for the center based on(Q,r)control policy to minimize expected average cost on an order cycle. A generic mathematical model to compute cost on real-time inventory level is developed to generate optimal order quantity under stochastic stock variation. The customer demands are described as compound Poisson process. Comparisons on cost between optimization method and experience-based decision onQare made through numerical studies conducted for the inventory system of the center.

PRICING PERISHABLE PRODUCTS WITH COMPOUND POISSON DEMANDS

We consider the dynamic pricing problem of perishable products in a system with a constant production rate. Potential demands arrive according to a compound Poisson process, and are price-sensitive. We carry out the sample path analysis of the inventory process and by using level-crossing method, we derive its stationary distribution given a pricing function. Based on the distribution, we express the average profit function. By a stochastic comparison approach, we characterize the pricing strategy given different customers willingness-to-pay functions. Finally, we provide an approximation algorithm to calculate the optimal pricing function.

A MODIFIED JOINT INVENTORY POLICY FOR VMI SYSTEMS

Vendor managed inventory (VMI) is a supply-chain initiative in which the vendor is authorized to manage inventories of agreed upon stock-keeping-units at retail locations. In this paper, a modified joint inventory policy is introduced for VMI systems where the vendor takes a standard (s, S) policy and the retailers utilize can-order policies. Under the regime of a can-order policy, each retailer's inventory is controlled by three variables s, c and S. Once the inventory position of retailer k reaches its must-order level s(k), a dispatch from the vendor to retailers is triggered. At the same time, any retailer j, with inventory position at or below its can-order level c(j), is included in the dispatch and thus an economical consolidated dispatch quantity accumulates. To formulate the policy, a renewal theoretic model for the case of Poisson demands is developed. Due to the complexity of the problem, it is difficult to get the analytical solution and thus simulations are utilized to obtain an approximate optimal decision. Finally, the results from simulations show that about 5 to 20 percent of the cost can be saved from utilizing of the modified joint policy, comparing with the standard joint (s, S) policy where both the vendor and retailers take (s, S) policies.