Single-Period Multiproduct Inventory Models with Substitution
1999; Institute for Operations Research and the Management Sciences; Volume: 47; Issue: 4 Linguagem: Inglês
10.1287/opre.47.4.632
ISSN1526-5463
AutoresYehuda Bassok, Ravi Anupindi, Ram Akella,
Tópico(s)Sustainable Supply Chain Management
ResumoWe study a single period multiproduct inventory problem with substitution and proportional costs and revenues. We considerNproducts andNdemand classes with full downward substitution, i.e., excess demand for classican be satisfied using productjfori≥j. We first discuss a two-stage profit maximization formulation for the multiproduct substitution problem. We show that a greedy allocation policy is optimal. We use this to write the expected profits and its first partials explicitly. This in turn enables us to prove additional properties of the profit function and several interesting properties of the optimal solution. In a limited computational study using two products, we illustrate the benefits of solving for the optimal quantities when substitution is considered at the ordering stage over similar computations without considering substitution while ordering. Specifically, we show that the benefits are higher with high demand variability, low substitution cost, low profit margins (or low price to cost ratio), high salvage values, and similarity of products in terms of prices and costs.
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