Abstract
This study considered reorder point on the continuous review inventory model under controllable lead time with mixture of backorder price discounts and partial lost sales. We developed a continuous review inventory model where the lead time, the order quantity, backorder discount and safety factor were considered as the decision variables of a mixture of backorders and lost sales inventory model. The objective was to minimize the expected total annual cost with respect to related decision variables. The purpose model with lead time demand distribution was unknown. The author applies a minimax distribution free procedure to find the optimal solution and numerical example was included to illustrate the solution procedure of the proposed algorithms.
Highlights
It is important to manage inventory quantity for modern enterprises
Ouyang and Wu[15] relaxed the assumption on the form of cumulative distribution function of the lead time demand and applied the minimax distribution free procedure to solve the problem
The following algorithm is developed to find the optimal values of the order quantity, backorder price discount, safety factor and lead time for the problem under study
Summary
It is important to manage inventory quantity for modern enterprises. the time condensation will predictably raise the cost, a customer will pay remuneration to the supplier who can provide its product faster and more firm than the competition and the price payment may be praiseworthy. Ouyang and Wu[15] relaxed the assumption on the form of cumulative distribution function of the lead time demand and applied the minimax distribution free procedure to solve the problem. This study considers a continuous review inventory system in which the lead time is controllable and can be decomposed into several components each having a crashing cost function.
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