Abstract
Article history: Received October 2 2013 Received in revised format November 7 2013 Accepted January 1
Highlights
In the recent inventory control system, modern enterprises realize the importance of managing inventory efficiently to run the system profitably
By shortening the lead time, we can lower the safety stock, reduce the loss caused by stock out; improve the service level to the customer and increase the competitive ability in business
Jaggi and Arneja (2010) considered a periodic inventory model with unstable lead-time and setup cost with backorder rate depending on backorder discount only
Summary
In the recent inventory control system, modern enterprises realize the importance of managing inventory efficiently to run the system profitably. The backorder rate depends on the length of the protection interval (period during which shortages can occur) . The consideration is ‘unsatisfied demand during the shortages can lead to optimal backorder ratio by controlling the price discount and the length of protection interval’ which helps the supplier to minimize his total inventory cost. In a recent study, Pan and Hsiao (2005) expanded the continuous inventory model by considering the case where lead-time crashing cost is taken as the function of reduced lead-time and ordered quantities. Chuang et al (2004) presented a periodic review inventory model with variable lead-time and reduction of setup cost. Jaggi and Arneja (2010) considered a periodic inventory model with unstable lead-time and setup cost with backorder rate depending on backorder discount only. The lead-time is controllable and has shown that the significant saving could be obtained by offering suitable backorder discount
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