Workshop’s Topic: We study a multi-period inventory control problem with a fixed replenishment lead time and stochastic purchase returns. Each unit of sales can be returned within a fixed return window after purchase and used to fulfill new demands. Unmet demand is lost. The objective is to find a replenishment policy that minimizes the long-run average cost. Due to the presence of stochastic returns, even the optimal policy for the system with zero lead time is very complex. For both systems with zero and a positive lead time, we prove that under some mild conditions, two simple policies the best base-stock policy and the myopic policy are asymptotically optimal as the unit lost-sales penalty cost increases. This suggests their potential use for practical implementation, especially for retail applications with high target service levels. Our numerical results also show the improvements of the performances of the base-stock and myopic policies after appropriately incorporating the return processing cost and return probabilities. This is a joint work with Huanan Zhang and Stefanus Jasin.

Time and Location: 10:00 AM (GMT+8), Room A523 (School of Management)

Language: Bilingual (Chinese and English)