Near-Optimal Mixed (s,S) Policy for a Multiwarehouse, Multistore Inventory System with Lost Sales and Fixed Cost

Smarter Inventory Control Through Policy Mixing Coordinating inventory across multiple warehouses and retail stores becomes significantly more complex when fixed ordering costs and lost sales are involved. The paper “Near-Optimal Mixed (s,S) Policy for a Multiwarehouse, Multistore Inventory System with Lost Sales and Fixed Cost,” introduces a novel solution to this challenge. By leveraging Lagrangian relaxation, the authors develop a mixed (s,S) policy that assigns two carefully selected ordering strategies to each store: one for the early phase of the selling horizon and another for the later phase. This structured mix allows the policy to approximate the optimal solution, satisfying inventory constraints and managing costs effectively. The approach achieves a provable near-optimality guarantee and highlights the power of combining simple policies to tackle complex supply chain problems.