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Annals of Operations Research

, Volume 280, Issue 1–2, pp 351–376 | Cite as

Managing premium wines using an \((s - 1,s)\) inventory policy: a heuristic solution approach

  • Mauricio VarasEmail author
  • Franco Basso
  • Armin Lüer-Villagra
  • Alejandro Mac Cawley
  • Sergio Maturana
Original Research

Abstract

Operations research models are increasingly being used to support decision making in the wine industry. However, they have not yet been used to support inventory management decisions. In this paper, we develop a heuristic procedure for managing the stock of premium wines motivated by the operations of a small export-focused winery we worked with. Following an \((s-1,s)\) inventory policy, we assume that the decision maker aims to minimize the steady-state expected values of work in process, overage, and underage costs. The developed heuristic is as follows. First, we approximate the dynamics of the labeling process by a group scheduling policy to obtain the mean delays for each labeled product. Then, we address the problem of setting the inventory positions for the whole product portfolio by solving one newsvendor-type problem for each end-product. We provide some theoretical insights, a numerical example, and we analyze the accuracy of our procedure.

Keywords

Wine industry OR models Inventory management \((s-1, s)\) 

Notes

Acknowledgements

We would like to sincerely thank the two reviewers and the editor for their valuable suggestions that allowed us to considerably improve a preliminary version of this work. We also gratefully acknowledge financial support from FONDECYT (under Grant 1150882) and from the Complex Engineering Systems Institute, ISCI (Grant CONICYT FB0816).

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  • Mauricio Varas
    • 1
    Email author
  • Franco Basso
    • 2
  • Armin Lüer-Villagra
    • 3
  • Alejandro Mac Cawley
    • 4
  • Sergio Maturana
    • 4
  1. 1.Facultad de IngenieríaUniversidad del DesarrolloSantiagoChile
  2. 2.Escuela de Ingeniería IndustrialUniversidad Diego PortalesSantiagoChile
  3. 3.Departamento de Ciencias de la IngenieríaUniversidad Andres BelloSantiagoChile
  4. 4.Departamento de Ingeniería Industrial y SistemasPontificia Universidad Católica de ChileSantiagoChile

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