Technical note : worst-case performance of power-of-two policies for serial inventory systems with incremental quantity discounts

Brian Q. RIEKSTS, José A. VENTURA, Yale T. HERER, Daning SUN

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

6 Citations (Scopus)

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 languageEnglish
Pages (from-to)583-587
Number of pages5
JournalNaval Research Logistics
Volume54
Issue number5
DOIs
Publication statusPublished - 1 Aug 2007

Fingerprint

Quantity Discount
Worst-case Performance
Inventory Systems
Costs
Planning
Lower bound
Ordering Policy
Optimal Solution
Policy
Incremental
Quantity discount
Inventory systems
Serials
Dependent
Zero
Lower bounds

Keywords

  • Inventory/production
  • Multi-stage with incremental quantity discounts
  • Power-of-two policies

Cite this

RIEKSTS, Brian Q. ; VENTURA, José A. ; HERER, Yale T. ; SUN, Daning. / Technical note : worst-case performance of power-of-two policies for serial inventory systems with incremental quantity discounts. In: Naval Research Logistics. 2007 ; Vol. 54, No. 5. pp. 583-587.
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Technical note : worst-case performance of power-of-two policies for serial inventory systems with incremental quantity discounts. / RIEKSTS, Brian Q.; VENTURA, José A.; HERER, Yale T.; SUN, Daning.

In: Naval Research Logistics, Vol. 54, No. 5, 01.08.2007, p. 583-587.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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