Multimodularity and its applications in three stochastic dynamic inventory problems

Qing Li, P. Yu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

62 Citations (Scopus)

Abstract

We apply the concept of multimodularity in three stochastic dynamic inventory problems in which state and decision variables are economic substitutes. The first is clearance sales of perishable goods. The second is sourcing from multiple suppliers with different lead times. The third is transshipment under capacity constraints. In all three problems, we establish monotone optimal polices with bounded sensitivity. Multimodularity proves to be an effective tool for these problems because it implies substitutability, it is preserved under minimization, and it leads directly to monotone optimal policies with bounded sensitivity. ©2014 INFORMS.
Original languageEnglish
Pages (from-to)455-463
Number of pages9
JournalManufacturing and Service Operations Management
Volume16
Issue number3
DOIs
Publication statusPublished - 1 Jan 2014
Externally publishedYes

Keywords

  • Dynamic programming
  • Multimodularity
  • Stochastic inventory models
  • Substitutability and complementarity

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research

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