Normal view MARC view

A Sensitivity analysis of stochastic inventory systems

Author: De Groote, Xavier ; Zheng, Yu-ShengINSEAD Area: Technology and Operations Management Series: Working Paper ; 92/16/TM Publisher: Fontainebleau : INSEAD, 1992.Language: EnglishDescription: 17 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: This paper derives sensitivity properties of the single item inventory model with stochastic demand and positive set-up costs. The analysis emphasizes the effect of changes in the variability of the leadtime demand. For the order-quantity/reorder-point systems, it is proved that when the variability of the leadtime demand increases the optimal order quantity increases, but, somewhat contrary to the conventional wisdom, the optimal reorder point does not necessarily increase; the minimum cost of the inventory system also increases, and it increases at a slower rate than and converges to the cost of the optimal base-stock policy. The cost performance becomes more robust to the choice of order quantity. In addition, it is shown that both the optimal reorder point and the optimal order-up-to level decrease or increase as the inventory holding or shortage penalty/cost increases
Tags: No tags from this library for this title. Add tag(s)
Log in to add tags.
Item type Current location Collection Call number Status Date due
INSEAD Working Paper Digital Library
PDF Available

This paper derives sensitivity properties of the single item inventory model with stochastic demand and positive set-up costs. The analysis emphasizes the effect of changes in the variability of the leadtime demand. For the order-quantity/reorder-point systems, it is proved that when the variability of the leadtime demand increases the optimal order quantity increases, but, somewhat contrary to the conventional wisdom, the optimal reorder point does not necessarily increase; the minimum cost of the inventory system also increases, and it increases at a slower rate than and converges to the cost of the optimal base-stock policy. The cost performance becomes more robust to the choice of order quantity. In addition, it is shown that both the optimal reorder point and the optimal order-up-to level decrease or increase as the inventory holding or shortage penalty/cost increases

Digitized

There are no comments for this item.

Log in to your account to post a comment.
Koha 3.18 - INSEAD Library Catalogue
Library Home | Contact Us | What's Koha?