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Note: A Simple Heuristic for Serial Inventory Systems with Fixed Order Costs

Fuqua School of Business, Duke University, Durham, North Carolina 27708
khshang{at}duke.edu

We propose a heuristic for finding base order quantities for stochastic inventory models. The heuristic includes two steps. The first clusters the stages according to cost parameters. The second solves a single-stage problem for each cluster with the original problem data. In a numerical study, we show that the heuristic is near optimal.

Subject classifications: multiecholon; (R, nQ) policies; simple solution.
History: Received August 2004; revision received March 2007; accepted March 2007.

This article has been cited by other articles:

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