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dc.contributor.authorGijsbrechts, Joren
dc.contributor.authorImdahl, Christina
dc.contributor.authorBoute, Robert
dc.contributor.authorVan Mieghem, Jan A.
dc.date.accessioned2023-08-16T03:31:23Z
dc.date.available2023-08-16T03:31:23Z
dc.date.issued2023en_US
dc.identifier.issn1059-1478
dc.identifier.doi10.2139/ssrn.4295869
dc.identifier.doi10.1111/poms.14069
dc.identifier.urihttp://hdl.handle.net/20.500.12127/7254
dc.description.abstractWe study inventory control with volume flexibility: A firm can replenish using period-dependent base capacity at regular sourcing costs and access additional supply at a premium. The optimal replenishment policy is characterized by two period-dependent base-stock levels but determining their values is not trivial, especially for non-stationary and correlated demand. We propose the Lookahead Peak-Shaving policy that anticipates or peak shaves orders from future peak-demand periods to the current period, thereby matching capacity and demand. Peak shaving anticipates future order peaks and partially shifts them forward. This contrasts with conventional smoothing, which recovers the inventory deficit resulting from demand peaks by increasing later orders. Our contribution is three-fold. Firstly, we use a novel iterative approach to prove the robust optimality of the Lookahead Peak-Shaving policy. Secondly, we provide explicit expressions of the period-dependent base-stock levels and analyze the amount of peak shaving. Finally, we demonstrate how our policy outperforms other heuristics in stochastic systems. Most cost savings occur when demand is non-stationary and negatively correlated, and base capacities fluctuate around the mean demand. Our insights apply to several practical settings, including production systems with overtime, sourcing from multiple capacitated suppliers, or transportation planning with a spot market. Applying our model to data from a manufacturer reduces inventory and sourcing costs by 6.7%, compared to the manufacturer's policy without peak shaving.en_US
dc.language.isoenen_US
dc.publisherWileyen_US
dc.subjectRobust Optimizationen_US
dc.subjectInventoryen_US
dc.subjectPeak Shavingen_US
dc.subjectFlexibilityen_US
dc.titleOptimal robust inventory management with volume flexibility: Matching capacity and demand with the lookahead peak-shaving policyen_US
dc.identifier.journalProduction and Operations Managementen_US
dc.source.volume32
dc.source.issue11
dc.source.beginpage3357
dc.source.endpage3373
dc.contributor.departmentCatholic University of Portugal (UCP) - Catolica Lisbon School of Business and Economicsen_US
dc.contributor.departmentEindhoven University of Technologyen_US
dc.identifier.eissn1937-5956
vlerick.knowledgedomainOperations & Supply Chain Managementen_US
vlerick.typearticleFT ranked journal article  en_US
vlerick.vlerickdepartmentTOMen_US
dc.identifier.vperid102358en_US


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