Abstract
We have modeled a new (Q, r) inventory system which involves a single product, a supplier, and a retailer with customer differentiation under continuous review inventory policy. The supplier provides the retailer with all requirements, and the retailer sells products to the customers. The supplying process is randomly subject to disruptions. Partial backordering is applied when a stock out occurs, and customer can select either to leave the system without purchasing or to backorder products. The customers are categorized into two main classes regarding to their backordering probabilities. The main contribution of this paper is including the customer differentiation in the inventory model. We used simulation technique to verify the impact of supply disruptions and customer differentiation and carried out sensitivity analysis. To test the performance of the model, we have compared our model to one from the latest related research. As the results show, the average of total annual cost of the (Q, r) inventory system is lower than that of the previously developed models such as (r, T) inventory systems.
Highlights
Inventory management has received wide attention in such a way the recent researches in this field have focused on the study of inventory system in the presence of supply chain problems such as supply disruption
We investigate the impacts of supply disruptions and customer differentiation on the inventory system
For studying the inventory system, we used a simulation model consisting of two subsystems including demand subsystem and replenishment subsystem; the effects of supply disruptions and customer differentiations on average annual costs of the inventory system
Summary
Inventory management has received wide attention in such a way the recent researches in this field have focused on the study of inventory system in the presence of supply chain problems such as supply disruption. Parlar [5] considers a continuousreview stochastic inventory problem with random demand and random lead time in the situation where supply may be disrupted. ArreolaRisa and DeCroix [7] studied inventory management under random supply disruptions and partial backorders, with an (s, S) policy being considered. We consider a continuous-review inventory system in the presence of supply disruptions, with the relaxation of some assumptions that are made in the previous researches. Customer differentiation which is included in the proposed model has not been considered in the previous continuousreview inventory systems.
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