Linwei Xin, a professor of industrial and enterprise systems engineering, won two prizes for his paper “Asymptotic Optimality of Tailored Base-Surge Policies in Dual-Sourcing Inventory Systems” at the recent annual meeting of the Institute for Operations Research and the Management Sciences. The paper was awarded the first-place prize in the 2015 George E. Nicholson Student Paper Competition and the second-place prize in the 2015 Junior Faculty Interest Group Paper Competition.
The paper, co-written by professor David E. Goldberg, addresses dual-sourcing inventory systems. In these systems, one supplier is faster, but more costly. The other is cheaper, but slower.
Dual-sourcing inventory systems create a problem in that they’re difficult to optimize. Recently, tailored base-surge policies have been proposed as a heuristic method for such models, and are shown numerically to perform well as the lead-time difference between the two suppliers grows large. This paper provides a theoretical foundation for this phenomenon.
When Xin worked as a data science intern at Walmart.com last summer, these policies were tested for the company and produced positive results. The company is in the process of implementing the policy.
Xin said these findings are important because they solve major open problems in this field. His research is focused in supply-chain and inventory management, optimization under uncertainty, data-driven decision making, and revenue management.