Inventory control with demand substitution: new insights from a two-product Economic Order Quantity analysis
研究了两种可替代产品的库存最优控制,不强制同时订货,发现对称问题可能产生非对称解,部分替代总由单向替代实现。
We study optimal inventory control of two products with demand substitution, that is, where customers switch to the other product if their first choice is not on hand. Going back to the basics, we present a stylized Economic Order Quantity type model with two substitute products having the same constant demand rate and cost structure. Different from the literature, we do not presume that both products must be ordered at the same time. This leads to new insights into when no, partial, and full substitution are optimal. Most interestingly, it turns out that this symmetric problem can have an asymmetric solution. If partial substitution is optimal, then this is always achieved by one-way substitution and never by two-way substitution.