One of the most important policies adopted in inventory control is the (R,S) policy (also known as the "replenishment cycle" policy). Under the non-stationary demand assumption the (R,S) policy takes the form (R ,S) where R denotes the length of the n replenishment cycle, and S the corresponding order-up-to-level. Such a policy provides an effective means of damping planning instability and coping with demand uncertainty. In this paper we develop a CP approach able to compute optimal (R,S) policy parameters under stochastic demand, ordering, holding and shortage costs. The convexity of the cost-function is exploited during the search to compute bounds. We use the optimal solutions to analyze the quality of the solutions provided by an approximate MIP approach that exploits a piecewise linear approximation for the cost function.
|Title of host publication||Integration of AI and OR Techniques in Constraint Programming for Combinatorial Optimization Problems|
|Subtitle of host publication||4th International Conference, CPAIOR 2007, Brussels, Belgium, May 23-26, 2007. Proceedings|
|Editors|| Pascal Van Hentenryck, Laurence Wolsey|
|Number of pages||15|
|Publication status||Published - 23 Jun 2007|
|Name||Lecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)|
|Publisher||Springer Berlin / Heidelberg|