Abstract
The main purpose of this study is to investigate the periodic inventory model with backorder price discounts, where shortages are partially backlogged. The application of just-in-time (JIT) philosophy i.e., crashing of the lead-time and setup cost has been carried component wise. Two cases have been discussed viz: 1) protection interval demand distribution is known (normal distribution approach); 2) protection level demand distribution is unknown (minimax distribution approach). An algorithm has been developed which jointly optimises the review period, the backorder price discount, the setup cost and lead-time for a known service level. Numerical results clearly indicate that significant savings could be achieved.
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