(s,S) Policies for a Dynamic Inventory Model with Stochastic Lead Times
Operations Research · 1984 · Volume 32 · Issue 1
Abstract
This study analyzes a stochastic lead time inventory model under the assumptions that (a) replenishment orders do not cross in time and (b) the lead time distribution for a given order is independent of the number and sizes of outstanding orders. The study extends the existing literature on the finite-horizon version of the model and yields an intuitively appealing dynamic program that is nearly identical to one that would apply in a transformed model with all lead times fixed at zero. Hence, many results that have been derived for fixed lead time models generalize easily. Conditions for the optimality of myopic base-stock policies, and for the optimality of ( s , S ) policies are established for both finite and infinite planning horizons. The infinite-horizon model analysis is extended by adapting the fixed lead time results for the efficient computation of optimal and approximately optimal ( s , S ) policies.
Keywords
354 (s, S) policies for stochastic lead time, 362 stochastic inventory lead times
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