Evaluation Of Cost Balancing Policies In Multi Echelon Stochastic Inventory Control Problems

Download or read book Evaluation of Cost Balancing Policies in Multi-echelon Stochastic Inventory Control Problems written by Qian Yu (S.M.) and published by . This book was released on 2010 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: (cont.) The dual-balancing policy can be modified in several ways to get other cost balancing policies. It has been proven that the dual-balancing policy has a worst-case guarantee of 2 but this does not indicate the empirical performance. An approximately optimal policy is considered as the benchmark to test the quality of the cost balancing policies. In the computational experiments, the dual-balancing policy shows an average error of 7.74% compared to the approximately optimal policy, much better than the theoretical worst-case guarantee. The three variants of cost balancing policies have made significant improvement on the performance of the dual-balancing policy. The accuracy of the dual-balancing policy is also affected by the system parameters. In addition, with high demand rate and long lead times, we have observed several scenarios when the cost balancing policies dominate the approximately optimal policy.