Please use this identifier to cite or link to this item: https://doi.org/10.1016/j.ejor.2012.07.038
Title: Optimal policies for inventory systems with two types of product sharing common hardware platforms: Single period and finite horizon
Authors: Chou, M. 
Sim, C.-K.
Yuan, X.-M.
Keywords: Dynamic programming
Inventory
Optimal policies
Software
Issue Date: 2013
Source: Chou, M., Sim, C.-K., Yuan, X.-M. (2013). Optimal policies for inventory systems with two types of product sharing common hardware platforms: Single period and finite horizon. European Journal of Operational Research 224 (2) : 283-292. ScholarBank@NUS Repository. https://doi.org/10.1016/j.ejor.2012.07.038
Abstract: In this paper, we consider an inventory system whose products share a common hardware platform but are differentiated by two types of software. Choice of different software results in different installation cost and different selling price of the whole product. Product with different software also faces different customer demand. We investigate the optimal proportion of an order to be installed with software 1 or 2, that maximizes expected profit in the single and multiple period scenarios, respectively. The optimal policy is analytically obtained and proved to be an order-up-to policy in each scenario. Our investigation reveals that whether to replenish, and how much to replenish each product depend not only on its own initial inventory level, and system parameters, but also the initial inventory level of the other product. We perform numerical experiments using the optimal policies we have derived in the paper. © 2012 Elsevier B.V. All rights reserved.
Source Title: European Journal of Operational Research
URI: http://scholarbank.nus.edu.sg/handle/10635/43967
ISSN: 03772217
DOI: 10.1016/j.ejor.2012.07.038
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