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Reducing order and inventory variability under stochastic lead-time and correlated demand

Wang, Xun and Disney, Stephen Michael 2015. Reducing order and inventory variability under stochastic lead-time and correlated demand. Presented at: 6th IESM Conference, Seville, Spain, 21 - 23 October 2015.

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Abstract

Logistic volatility is considered to be an important contributor to supply chain inefficiency. In this paper we investigate the amplification of order and inventory fluctuations in a state-space model with stochastic lead time, ARMA(p,q) demand and a proportional order-up-to policy. We derive the exact distribution functions for order and inventory. For i.i.d. Gaussian demand, we prove that the proportional outperforms the classical order-up-to policy in reducing inventory and order variances simultaneously. Numerical experiments are carried out to show the complex interaction between demand correlation and stochastic lead-time.

Item Type: Conference or Workshop Item (Paper)
Date Type: Completion
Status: Unpublished
Schools: Centre for Advanced Manufacturing Systems At Cardiff (CAMSAC)
Business (Including Economics)
Subjects: H Social Sciences > HE Transportation and Communications
T Technology > TS Manufactures
Related URLs:
Date of First Compliant Deposit: 30 March 2016
Last Modified: 04 Jun 2017 08:19
URI: http://orca.cf.ac.uk/id/eprint/75761

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