tailored base-surge policy (tbs)

Optimality Gap of Tailored Base-Surge Policies Decays Exponentially in Regular-Source Lead Times for Dual-Sourcing Models

  • Xin Chen
  • Shuai Li
  • Weijun Xie
    • Categories Dynamic Programming, Stochastic Programming, Supply Chain Management Tags , , , , ,

    This paper resolves an open problem posed in the literature by proving that, in dual-sourcing inventory systems, the optimality gap of tailored base-surge (TBS) policies decays exponentially with the regular source lead time, with the express-source lead time fixed. In contrast to the existing approach, which relies on conditional Jensen inequalities and a vanishing-discount argument … Read more

    Asymptotic optimality of Tailored Base-Surge policies in dual-sourcing inventory systems

  • David A. Goldberg
  • Linwei Xin
    • Categories Dynamic Programming, Stochastic Programming, Supply Chain Management Tags , , , , ,

    Dual-sourcing inventory systems, in which one supplier is faster (i.e. express) and more costly, while the other is slower (i.e. regular) and cheaper, arise naturally in many real-world supply chains. These systems are notoriously difficult to optimize due to the complex structure of the optimal solution and the curse of dimensionality, having resisted solution for … Read more