Inventory control under non-stationary stochastic demand
» (s, S) policy


In the recent years, most industries experience non-stationary (time-varying) demand with higher frequency because product life cycles are getting increasingly shorter in response to fast technological progress and rapid changes in consumer preferences. As such, firms must employ inventory control policies which can effectively handle non-stationary demand to match their supply to demand.

This online application is committed to the inventory control problem in a finite-horizon periodic-review system with fixed replenishment set-up costs, and linear procurement, holding and backorder costs; and works out the parameters of the (s, S) inventory control policy – which is known to be optimal for this system configuration. The current prototype is limited to planning horizons up to 12 periods, and assumes normally distributed demands. For a given set of instance parameters, it computes a re-order and an order-up-to level for each time period minimizing the expected total costs over the planning horizon, and simulates the resulting control policy.

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© 2011, Onur A. Kilic and S. Armagan Tarim – Hacettepe University, Ankara, Turkey
This project is supported by the Scientific and Technological Research Council of Turkey (TUBITAK) #110M500.