A Decision Support System for Computing Optimal (R, S) Policy Parameters
Ş. Armağan Tarim, Brahim Hnich, Roberto Rossi, Steven Prestwich · Socio-Environmental Systems Modeling · 2008
Retail replenishment is a high-value activity. According to the US Commerce Department, $1.1 trillion in inventory supports $3.2 trillion in annual US retail sales [...]. Improving distribution centre efficiency of just a few percentage points through advanced automation and real-time replenishment may deliver significant savings and require less capital to be tied up in inventory. 1 An interesting class of production/inventory control problems is the one that considers the single-location, single-product case under non-stationary stochastic demand, fixed production/ordering cost and per-unit holding cost. Exact and efficient approaches for computing optimal production/replenishment decisions are a key factor for achieving profitability in retail business. One of the possible policies that can be adopted to manage stocks is the replenishment cycle policy [6]. In this policy the inventory review times are set under a here-and-now strategy at the beginning of the planning horizon. These decisions are not affected by the actual demand realized in each period. On the other hand, for each inventory review we observe the actual demand realized in former periods to compute