Sensitivity Analysis for Base-Stock Levels in Multiechelon Production-Inventory Systems

Paul Glasserman · SRIDHAR R. TAYUR

266 citations0/0 files storedManagement Science

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Supply Chain and Inventory Management Management and Optimization Techniques Simulation Techniques and Applications

Abstract

Effective management of inventories in large-scale production and distribution systems requires methods for bringing model solutions closer to the complexities of real systems. Motivated by this need, we develop simulation-based methods for estimating sensitivities of inventory costs with respect to policy parameters. These sensitivity estimates are useful in adjusting optimal parameters predicted by a simplified model to complexities that can be incorporated in a simulation. We consider capacitated, multiechelon systems operating under base-stock policies and develop estimators of derivatives with respect to base-stock levels. We show that these estimates converge to the correct value for finite-horizon and infinite-horizon discounted and average cost criteria. Our methods are easy to implement and experiments suggest that they converge quickly. We illustrate their use by optimizing base-stock levels for a subsystem of the PC assembly and distribution system of a major computer manufacturer.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 266 citations exist upstream.

References

1987Applied Probability and Queues 1978Stochastic Approximation Methods for Constrained and Unconstrained Systems 2004Optimal Policies for a Multi-Echelon Inventory Problem 1986An Inventory Model with Limited Production Capacity and Uncertain Demands II. The Discounted-Cost Criterion 1984Approximations of Dynamic, Multilocation Production and Inventory Problems 1984Computational Issues in an Infinite-Horizon, Multiechelon Inventory Model 1989Optimal Inventory Policies for Assembly Systems Under Random Demands 1960Dynamic Inventory Policy with Varying Stochastic Demands

Cited by

2000A Supply Network Model with Base-Stock Control and Service Requirements 2007Provably Near-Optimal Sampling-Based Policies for Stochastic Inventory Control Models 2002Newsvendor Networks: Inventory Management and Capacity Investment with Discretionary Activities 2003Supply Chain Design: Safety Stock Placement and Supply Chain Configuration 2009Robust Approximation to Multiperiod Inventory Management

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.