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Note: A Simple Heuristic for Serial Inventory Systems with Fixed Order Costs

Kevin H. Shang

Operations Research · 2008 · Volume 56 · Issue 4

DOI: 10.1287/opre.1080.0547

Abstract

We propose a heuristic for finding base order quantities for stochastic inventory models. The heuristic includes two steps. The first clusters the stages according to cost parameters. The second solves a single-stage problem for each cluster with the original problem data. In a numerical study, we show that the heuristic is near optimal.

Keywords

multiecholon, (R, nQ) policies, simple solution

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