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: Contribution to journalArticlepeer-review

6 Scopus citations

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 (US)
Pages (from-to)583-587
Number of pages5
JournalNaval Research Logistics
Volume54
Issue number5
DOIs
StatePublished - Aug 2007

All Science Journal Classification (ASJC) codes

  • Modeling and Simulation
  • Ocean Engineering
  • Management Science and Operations Research

Fingerprint Dive into the research topics of 'Technical note: Worst-case performance of power-of-two policies for serial inventory systems with incremental quantity discounts'. Together they form a unique fingerprint.

Cite this