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Inventory Rationing - A New Modeling Approach Using Markov Chain Theory

Inventory Rationing - A New Modeling Approach Using Markov Chain Theory

Karin Möllering

 

Verlag Springer Gabler, 2019

ISBN 9783658242558 , 188 Seiten

Format PDF, OL

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Inventory Rationing - A New Modeling Approach Using Markov Chain Theory


 

Contents

8

List of Tables

14

List of Figures

16

List of Abbreviations

18

List of Symbols

20

1 Introduction

23

1.1 Motivation

24

1.2 Research Objectives

25

1.3 Outline

26

Part I Foundations of Stochastic Inventory Control

29

2 Basic Concepts of Inventory Management

30

2.1 Inventory Management and Control

31

2.2 Motivations for Holding Inventory

32

2.3 Classification of Inventories

34

2.3.1 The Strategic Perspective

34

2.3.2 The Operational Perspective

35

2.4 Inventory-related Costs

37

2.4.1 Order Cost

37

2.4.2 Holding Cost

38

2.4.3 Penalty Cost

39

2.5 Service Level

40

3 Stochastic Inventory Control

42

3.1 Characteristics of Inventory Models

43

3.1.1 Management Decisions

43

3.1.2 System-Inherent Characteristics

44

3.2 Types of Inventory Control Policies

46

3.3 Periodic Inventory Control

48

3.3.1 Single-Period Inventory Control

49

3.3.2 Multi-Period Inventory Control

50

3.3.3 Service-Constraint Multi-Period Inventory Control

53

Part II Essential Stochastic Processes

54

4 Markov Chains

55

4.1 The Markov Property

56

4.2 Homogeneous Markov Chains

57

4.3 Limit Distribution and Invariant Distribution

58

4.4 Communication Classes

60

4.5 Class Properties

61

4.5.1 Aperiodicity

61

4.5.2 Recurrency and Transiency

61

4.5.3 Class Criteria

63

4.6 Uniqueness of Limit Distributions

64

4.7 Multi-Dimensional Markov Chains

65

4.8 Applications of Markov Chains

66

5 Numerical Solution of Infinite Markov Chains

67

5.1 System Reduction Approaches

68

5.1.1 Reduced System Approaches

68

5.1.2 Geometric Tail Distributions

69

5.2 State Space Reduction Approaches

70

5.2.1 Augmentations

70

5.2.2 Pointwise Convergence

72

5.3 Algorithms

74

5.3.1 Sheskin’s Partitioning Algorithm

74

5.3.2 Power Iteration

76

5.4 Criteria for Choosing a Specific Algorithm

76

6 Comparing Stochastic Processes

78

6.1 Stochastic Ordering for Distribution Functions

78

6.2 The Sample Path Method

80

Part III Stochastic Inventory Control with Customer Segmentation

82

7 Introduction to Inventory Rationing

83

7.1 Examples for Different Customer Classes

84

7.2 Related Areas

85

7.3 Rationing Rules

87

7.4 Backorders and Backorder Clearing Mechanisms

89

7.5 Literature Review

91

7.5.1 Characterizations of the Optimal Policy

91

7.5.2 Evaluations and Optimizations of Critical Level Policies

94

7.5.3 Other Studies Involving Critical Level Rationing

98

7.6 Classification of Our Work

99

8 A Markov-Chain Based Modeling Approach

101

8.1 Modeling Framework

102

8.2 Recursive Expressions for Backorders

102

8.3 Markov Chain

104

8.4 Structural Results

105

8.5 Proofs

108

9 Prioritization by Penalty Costs

115

9.1 Optimization Approach

116

9.1.1 Convexity of Objective Function

116

9.1.2 Transition Matrix

118

9.1.3 Cost Function

119

9.1.4 Numerical Optimization Algorithm

120

9.2 Numerical Results

120

9.2.1 Critical Level Policy versus Benchmark Policies

121

9.2.2 Combination Heuristic

124

9.3 Conclusion

124

9.4 Proofs

126

10 Prioritization by Service Levels

129

10.1 Analytical Insights

130

10.1.1 Service Level Constraints

130

10.1.2 Potentially Optimal Parameter Constellations

133

10.1.3 Structural Results for the Optimal Solution

135

10.1.4 Cost Function

137

10.1.5 Model Alteration: ?-Service Levels

138

10.2 Numerical Results

139

10.2.1 Optimization Algorithm

140

10.2.2 Critical Level Policy versus Benchmark Policies

141

10.2.3 Heuristic Approach

144

10.3 Conclusion

145

10.4 Proofs

147

11 Dynamic Rationing Policies

153

11.1 The Next Period Optimization Policy

154

11.1.1 The Policy

154

11.1.2 Structural results

155

11.2 The Linear Critical Level Policy

156

11.2.1 The Policy

156

11.2.2 Structural results

157

11.3 Efficiency of the Dynamic Rationing Policies

160

11.3.1 Next Period Optimization and Constant Rationing Policy

161

11.3.2 Linear Critical Level Policy and Constant Rationing Policy

165

11.3.3 Next Period Optimization and Linear Critical Level Policy

168

11.4 Conclusion

170

11.5 Proofs

171

12 Conclusion and Critical Review

174

12.1 Contributions

174

12.2 Critical Review

176

12.3 Future Research

177

Bibliography

179