Optimality and nonoptimality of the base-stock policy in inventory problems with multiple delivery modes

Abstract

We present a periodic review inventory model with multiple deliverymodes. We generalize the notion of the base-stock policy for inventorysystems with multiple delivery modes. While base-stock policies areoptimal for one or two consecutive delivery modes, it is not sootherwise. For multiple consecutive delivery modes, we show that onlythe fastest two modes have optimal base stocks, and provide simplecounterexamples to show that the remaining ones do not in general. Weinvestigate why the base-stock policy is not optimal through detailedanalyses of two numerical examples.