Universität zu Köln

Hoberg, Kai ORCID: 0000-0003-2835-572X and Thonemann, Ulrich ORCID: 0000-0002-3507-9498 (2015). Analyzing Variability, Cost, and Responsiveness of Base-Stock Inventory Policies with Linear Control Theory. IIE Trans., 47 (8). S. 865 - 880. PHILADELPHIA: TAYLOR & FRANCIS INC. ISSN 1545-8830

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Abstract

The effect of inventory policies on order variability has been analyzed extensively. Two popular means of reducing order variability are demand smoothing and order smoothing. If the objective is minimizing demand variability, demands and orders can be heavily smoothed, resulting in an inventory policy that orders equal amounts in each time period. Such a policy obviously minimizes order variability, but it leads to high cost and low responsiveness of the inventory system. To optimize the overall performance of an inventory system, the effect of the inventory policy on all relevant dimensions of operational performance must be analyzed. We address this issue and analyze the effect of the parameter values of an inventory policy on three main dimensions of operational performance: Order variability, expected cost, and responsiveness. The inventory policy we use is the partial correction policy, a policy that can be used to smooth demand and to smooth orders. To analyze this policy, we use linear control theory. We derive the transfer function of the policy and prove the stability of the inventory system under this policy. Then, we determine the effect of the policy parameters on order variability, cost, and responsiveness and discuss how good parameter values can be chosen.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Hoberg, Kai UNSPECIFIED orcid.org/0000-0003-2835-572X UNSPECIFIED Thonemann, Ulrich UNSPECIFIED orcid.org/0000-0002-3507-9498 UNSPECIFIED
URN:	urn:nbn:de:hbz:38-396654
DOI:	10.1080/0740817X.2014.999897
Journal or Publication Title:	IIE Trans.
Volume:	47
Number:	8
Page Range:	S. 865 - 880
Date:	2015
Publisher:	TAYLOR & FRANCIS INC
Place of Publication:	PHILADELPHIA
ISSN:	1545-8830
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Center of Excellence C-SEB
Subjects:	Economics
Uncontrolled Keywords:	Keywords Language SUPPLY CHAINS; VARIANCE AMPLIFICATION; BULLWHIP; ORDER; STABILITY Multiple languages Engineering, Industrial; Operations Research & Management Science Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/39665