A replenishment decision involving partial postponement

This paper was motivated by a practical situation in the fast food industry. We consider the choice of the order quantities for a group of end items, each facing random demand in a period of interest. There is the additional option of having a limited number of units of unfinished stock that can be customized to produce any of the end items once demands materialize. Solution procedures are developed, the results of a large set of examples are presented, and a number of managerial insights are provided.This complete issue was revised and published online in November 2004. The previous version contained a false date. Correspondence to: Stefan MinnerThe authors wish to thank Y. Segal, D. Borotsik and J. Bermudez who worked on the original student project. Thanks are also extended to two anonymous referees for their constructive comments. The research leading to this paper was supported by the Natural Sciences and Engineering Research Council of Canada under Grant A1485 and by the Carma Chair at the University of Calgary. The research was carried out while the second author was a postdoctoral assistant at the University of Calgary and part of the work was completed while the first author was on sabbatical leave in the Department of Mathematics at the Swiss Federal Institute of Technology in Lausanne.