Periodic Review Inventory Model with Controllable Lead Time under Service level Constraint where Backorder Rate depends on Protection Interval

Abstract

In this paper, a periodic review inventory model with controllable lead time under the service level constraint has been examined where backorder rate is depend on the back order discount and the length of the protection interval which is sum of the review period and lead time. Shortages are allowed and partially backlogged. The demand during the protection interval is assumed to be normally distributed. The total cost has been obtained by jointly optimizing the review period, lead time and backorder discount under the effect of known service level. This study not only provides the greater flexibility to the inventory manager to coordinate inventory in more efficient manner but also makes enormous savings in total expected cost.