Seminar on July 22, 2016



Inventory Management with Substitution-Dependent Demand


Burak Ekşioğlu,

(Clemson University, Industrial Engineering Department) 



Motivated to apply sustainable supply chain principles to air-pollution control systems, this paper presents a dynamic inventory-management approach where substitution is possible to maintain these systems' equipment. An air-pollution control system's subsequent reliability depends on the replacement equipment selected. The corresponding problem is formulated as a stochastic dynamic program. Because the state and action space are prohibitively large, the approximate policy iteration algorithm is adapted to generate high-quality solutions. Therefore, this work replaces the value function with an affine combination of nonlinear basis functions and shows that a relaxation of the policy improvement step requires the solving of a mixed integer linear program. This approach helps in the designing of an algorithm that improves the quality of approximation by solving a convex optimization problem. In order to assess the quality of resulting solutions, a lower bound is developed by considering a relaxation of the problem. The performance of proposed policies is tested on a variety of settings, and results show they are near-optimal in most settings. The following analysis reveals that the proposed inventory replenishment policies resemble a base-stock policy, and assignment and substitution decisions are determined by balancing the reliability with ordering, holding, and shortage costs.


Short Bio: 

Dr. Burak Eksioglu is an associate professor in the Industrial Engineering Department at Clemson University. He has a Ph.D. from the University of Florida, an M.S. from the University of Warwick, and a B.S. from Bogazici University. Prior to joining Clemson, he taught at Mississippi State University for over ten years. His research program is focused on the area of optimization. Within this area, it spans applications in transportation logistics, production management, supply chain management, graph theory, and linear regression. His research has received funding from a variety of sources. Most of his funding in recent years has come from the U.S. Department of Transportation. However, he also received funding from Lockheed Martin, the U.S. Department of Homeland Security, the National Aeronautics and Space Administration, and the Mississippi Department of Transportation. He has published the results of his research in journals such as Naval Research Logistics, IIE Transactions, Operations Research Letters, Computers and Industrial Engineering, International Journal of Production Economics, Computers and Operations Research, and OMEGA. He is a member of Tau Beta Pi, INFORMS, IIE, ASEE, and POMS.


All interested are cordially invited.  


DATE:  July 22, 2016 

TIME:  Friday, 15:00-16:00