Title

Rolling‐horizon replenishment : policies and performance analysis

Document Type

Journal article

Source Publication

Naval Research Logistics (NRL)

Publication Date

9-1-2010

Volume

57

Issue

6

First Page

489

Last Page

502

Keywords

Rolling horizon, quantity supply contract, policy structure, optimization

Abstract

We consider a rolling‐horizon (RH) replenishment modeling framework under which a buyer can update demand information and inventory status, modify order quantities committed previously, place an advanced order for a new period at the end of the RH, and move along in time seamlessly. We show that the optimal order policy for the two‐period RH problem is a dual‐threshold type for updating period(s) plus a base‐stock type for the advanced order. We provide analytical formulas and algorithms to compute the optimal thresholds and the optimal base‐stock level exactly. With our analytical results and numerical procedures, we demonstrate the significant value of RH replenishment in matching supplies to demands more closely. We also show that with RH updating (flexibility), the value of additional demand information beyond the RH diminishes quickly.

DOI

10.1002/nav.20416

Print ISSN

0894069X

E-ISSN

15206750

Publisher Statement

Copyright © 2010 Wiley Periodicals, Inc.

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Full-text Version

Publisher’s Version

Recommended Citation

Lian, Z., Liu Liming, & Zhu, S. X. (2010). Rolling‐horizon replenishment: Policies and performance analysis. Naval Research Logistics (NRL), 57(6), 489-502. doi: 10.1002/nav.20416