Buffer stock analysis for a single source-single location inventory model with delivery lag

Abstract

This paper treats a buffer stock inventory system with a single source of supply and a single location of demand. It extends the work of Salameh (1997) by assuming a non-zero lead time and a finite rather than instantaneous delivery. Two cases of deterministic demand are treated: (1) the constant consumption rate case; and (2) the fluctuating demand case. The optimum inventory policy is to determine the buffer stock level that minimizes the sum of the expected holding and inventory stockout costs. Numerical examples are provided to illustrate the solution procedures for the mathematical models developed.