## Awi Federgruen

*Allocation policies and cost approximations for multilocation inventory systems*

Coauthor(s): Paul Zipkin.

**Abstract:**

Consider a central depot that supplies several locations experiencing random demands. Periodically, the depot may place an order for exogenous supply. Orders arrive after a fixed leadtime, and are then allocated among the several locations. Each allocation reaches its destination after a further delay. We consider the special case where the penalty-cost/holding-cost ratio is constant over the locations. Several approaches are given to approximate the dynamic program describing the problem. Each approach provides both a near-optimal order policy and an approximation of the optimal cost of the original problem. In addition, simple but effective allocation policies are discussed.

**Source:** *Naval Research Logistics*

**Exact Citation:**

Federgruen, Awi, and Paul Zipkin. "Allocation policies and cost approximations for multilocation inventory systems." *Naval Research Logistics* 31, no. 1 (1984): 97-129.

**Volume:** 31

**Number:** 1

**Pages:** 97-129

**Date:**
1984