Computational issues in a stochastic finite horizon one product recovery inventory model

Gudrun P. Kiesmüller, Carsten W. Scherer

Research output: Contribution to journalArticlepeer-review

71 Scopus citations

Abstract

Inderfurth [OR Spektrum 19 (1997) 111] and Simpson [Operations Research 26 (1978) 270] have shown how the optimal decision rules in a stochastic one product recovery system with equal leadtimes can be characterized. Using these results we provide in this paper a method for the exact computation of the parameters which determine the optimal periodic policy. Since exact computation is, especially in case of dynamic demands and returns, quite time consuming, we also provide two different approximations. One is based on an approximation of the value-function in the dynamic programming problem while the other approximation is based on a deterministic model. By means of numerical examples we compare our results and discuss the performance of the approximations.

Original languageEnglish
Pages (from-to)553-579
Number of pages27
JournalEuropean Journal of Operational Research
Volume146
Issue number3
DOIs
StatePublished - 1 May 2003
Externally publishedYes

Keywords

  • Dynamic programming
  • Inventory
  • Optimal control
  • Reverse logistics

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