TY - JOUR
T1 - Managing premium wines using an (s- 1 , s) inventory policy
T2 - a heuristic solution approach
AU - Varas, Mauricio
AU - Basso, Franco
AU - Lüer-Villagra, Armin
AU - Mac Cawley, Alejandro
AU - Maturana, Sergio
N1 - Funding Information:
We would like to sincerely thank the two reviewers and the editor for their valuable suggestions that allowed us to considerably improve a preliminary version of this work. We also gratefully acknowledge financial support from FONDECYT (under Grant 1150882) and from the Complex Engineering Systems Institute, ISCI (Grant CONICYT FB0816).
PY - 2019/1/1
Y1 - 2019/1/1
N2 - Operations research models are increasingly being used to support decision making in the wine industry. However, they have not yet been used to support inventory management decisions. In this paper, we develop a heuristic procedure for managing the stock of premium wines motivated by the operations of a small export-focused winery we worked with. Following an (s- 1 , s) inventory policy, we assume that the decision maker aims to minimize the steady-state expected values of work in process, overage, and underage costs. The developed heuristic is as follows. First, we approximate the dynamics of the labeling process by a group scheduling policy to obtain the mean delays for each labeled product. Then, we address the problem of setting the inventory positions for the whole product portfolio by solving one newsvendor-type problem for each end-product. We provide some theoretical insights, a numerical example, and we analyze the accuracy of our procedure.
AB - Operations research models are increasingly being used to support decision making in the wine industry. However, they have not yet been used to support inventory management decisions. In this paper, we develop a heuristic procedure for managing the stock of premium wines motivated by the operations of a small export-focused winery we worked with. Following an (s- 1 , s) inventory policy, we assume that the decision maker aims to minimize the steady-state expected values of work in process, overage, and underage costs. The developed heuristic is as follows. First, we approximate the dynamics of the labeling process by a group scheduling policy to obtain the mean delays for each labeled product. Then, we address the problem of setting the inventory positions for the whole product portfolio by solving one newsvendor-type problem for each end-product. We provide some theoretical insights, a numerical example, and we analyze the accuracy of our procedure.
KW - (s- 1 , s)
KW - Inventory management
KW - OR models
KW - Wine industry
UR - http://www.scopus.com/inward/record.url?scp=85065741293&partnerID=8YFLogxK
U2 - 10.1007/s10479-019-03266-3
DO - 10.1007/s10479-019-03266-3
M3 - Article
AN - SCOPUS:85065741293
SN - 0254-5330
VL - 280
SP - 351
EP - 376
JO - Annals of Operations Research
JF - Annals of Operations Research
IS - 1-2
ER -