A note on algorithms for dual sourcing inventory systems with Tailored Base-Surge policies

Abstract

This paper proposes two algorithms for dual sourcing inventory systems with Tailored Base-Surge policies. The first algorithm solves a system of linear equations to calculate inventory positions, performance measures and their derivatives, and the second algorithm then uses them in the gradient-based type of method to find the optimal Tailored Base-Surge policy. Numerical experiments show that the two algorithms work well.