A robust (Q, r) inventory model regarding inaccuracy of point estimation of demand status

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

Most literatures in design of (Q, r) inventory model assume that the expectation and standard deviation of demand are known. These descriptive statistics are derived by point estimation from historical data. While these point estimates used in the design may not represent the true demand status and sometimes may be far from true values. This inaccuracy of point estimation will lead to severe cost penalties. In this paper interval estimation is applied instead of point estimation. A robust design scheme following mini-max framework is conducted to find a satisfying (Q, r). We use relative inefficiency to evaluate performance of a certain (Q, r) in the mini-max process. Relative inefficiency refers to the expected difference between the aggregated cost of (Q, r) and the minimized cost given a precise demand status. Cases are established to validate this scheme.

Original languageEnglish
Title of host publicationProceedings - 2010 IEEE 17th International Conference on Industrial Engineering and Engineering Management, IE and EM2010
Pages1241-1243
Number of pages3
DOIs
StatePublished - 2010
Event17th International Conference on Industrial Engineering and Engineering Management, IE and EM2010 - Xiamen, China
Duration: 29 Oct 201031 Oct 2010

Publication series

NameProceedings - 2010 IEEE 17th International Conference on Industrial Engineering and Engineering Management, IE and EM2010

Conference

Conference17th International Conference on Industrial Engineering and Engineering Management, IE and EM2010
Country/TerritoryChina
CityXiamen
Period29/10/1031/10/10

Keywords

  • (Q
  • Demand status
  • Interval estimation
  • Mini-max
  • R) inventory model
  • Relative inefficiency
  • Robust design

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