Abstract
Supply contracts often specify the quantity of inventory for shipments where retailers are liable to pay for ordering costs if order quantity exceeds the contracted size. We analyze a periodic review system where the firm manages its demand that are reserved with a one-period leadtime together with a multi-tier supply contract. We show that the optimal inventory policy has the primary structure of “finite generalized base stock” policy whose critical numbers depend on reservation parameters. The single, multiple periods and the infinite horizon models are studied. The presence of ordering costs needs a different approach from that in Yuan and Cheung (2003) to analyze the infinite horizon model.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
