PERIODIC REVIEW INVENTORY MODELS WITH CONTROLLABLE LEAD TIME AND LOST SALES RATE REDUCTION

The purpose of this study is to investigate two stochastic periodic review inventory models affected by the lead time and lost sales rate. In our models, we consider that the lead time can be shortened at an extra crashing cost, which depends on the length of lead time. Moreover, we assume that the...

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Published inJournal of the Chinese Institute of Industrial Engineers Vol. 22; no. 5; pp. 355 - 368
Main Authors Ouyang, Liang-Yuh, Chuang, Bor-Ren, Lin, Yu-Jen
Format Journal Article
LanguageEnglish
Published Taylor & Francis Group 01.01.2005
Subjects
crashing cost
inventory
lost sales rate
minimax distribution free procedure
periodic review
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Abstract The purpose of this study is to investigate two stochastic periodic review inventory models affected by the lead time and lost sales rate. In our models, we consider that the lead time can be shortened at an extra crashing cost, which depends on the length of lead time. Moreover, we assume that the lost sales rate can also be reduced by capital investment. The objective of our study is to simultaneously optimize the review period, the lost sales rate and the lead time. We first assume that the protection interval (i.e., review period plus lead time) demand follows a normal distribution. Then, the assumption is relaxed to consider a distribution-free case where only the mean and standard deviation of protected interval demand are known. For each case, an algorithm is developed to find the optimal investment strategy. Finally, two numerical examples are given to illustrate the results.
AbstractList The purpose of this study is to investigate two stochastic periodic review inventory models affected by the lead time and lost sales rate. In our models, we consider that the lead time can be shortened at an extra crashing cost, which depends on the length of lead time. Moreover, we assume that the lost sales rate can also be reduced by capital investment. The objective of our study is to simultaneously optimize the review period, the lost sales rate and the lead time. We first assume that the protection interval (i.e., review period plus lead time) demand follows a normal distribution. Then, the assumption is relaxed to consider a distribution-free case where only the mean and standard deviation of protected interval demand are known. For each case, an algorithm is developed to find the optimal investment strategy. Finally, two numerical examples are given to illustrate the results.
Author Chuang, Bor-Ren
Ouyang, Liang-Yuh
Lin, Yu-Jen
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CitedBy_id crossref_primary_10_1111_itor_12177
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SubjectTerms crashing cost
inventory
lost sales rate
minimax distribution free procedure
periodic review
Title PERIODIC REVIEW INVENTORY MODELS WITH CONTROLLABLE LEAD TIME AND LOST SALES RATE REDUCTION
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Volume 22
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