Technical note: Worst‐case performance of power‐of‐two policies for serial inventory systems with incremental quantity discounts
In: Naval research logistics: an international journal, Band 54, Heft 5, S. 583-587
ISSN: 1520-6750
AbstractThis study presents power‐of‐two policies for a serial inventory system with constant demand rate and incremental quantity discounts at the most upstream stage. It is shown that an optimal solution is nested and follows a zero‐inventory ordering policy. To prove the effectiveness of power‐of‐two policies, a lower bound on the optimal cost is obtained. A policy that has a cost within 6% of the lower bound is developed for a fixed base planning period. For a variable base planning period, a 98% effective policy is provided. An extension is included for a system with price dependent holding costs. © 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007