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A base-stock inventory model with service differentiation and response time guarantees

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  • Gabor, Adriana F.
  • van Vianen, Lars A.
  • Yang, Guangyuan
  • Axsäter, Sven

Abstract

In response to customer specific service time guarantee requirements, service providers can offer differentiated services. Although response time agreements offer more flexibility, most of the theoretical models for customer differentiation are based on fill rates, due to the difficulty of calculating the response time distribution in the presence of priorities. In this paper we focus on the (S−1,S,K) model with two customer classes, in which low priority customers are served only if the inventory level is above K. For this model, we derive the exact distribution of the response time (within lead time) for the lower priority class and provide a new closed-form approximation for the fill rate for high priority customers. Via numerical experiments, we show that the fill rate approximation performs comparable to the best approximations in the literature, while its implementation requires only elementary operations.

Suggested Citation

  • Gabor, Adriana F. & van Vianen, Lars A. & Yang, Guangyuan & Axsäter, Sven, 2018. "A base-stock inventory model with service differentiation and response time guarantees," European Journal of Operational Research, Elsevier, vol. 269(3), pages 900-908.
    • Handle: RePEc:eee:ejores:v:269:y:2018:i:3:p:900-908
    DOI: 10.1016/j.ejor.2018.02.039
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    References listed on IDEAS

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    Cited by:

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    2. Mária Stopková & Ondrej Stopka & Vladimír Ľupták, 2019. "Inventory Model Design by Implementing New Parameters into the Deterministic Model Objective Function to Streamline Effectiveness Indicators of the Inventory Management," Sustainability, MDPI, vol. 11(15), pages 1-15, August.
    3. Basten, Rob J.I. & Ryan, Jennifer K., 2019. "The value of maintenance delay flexibility for improved spare parts inventory management," European Journal of Operational Research, Elsevier, vol. 278(2), pages 646-657.
    4. Mohammad Najjartabar Bisheh & G. Reza Nasiri & Esmaeil Esmaeili & Hamid Davoudpour & Shing I. Chang, 2022. "A new supply chain distribution network design for two classes of customers using transfer recurrent neural network," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 13(5), pages 2604-2618, October.
    5. Gabor, Adriana F. & van Ommeren, Jan-Kees & Sleptchenko, Andrei, 2022. "An inventory model with discounts for omnichannel retailers of slow moving items," European Journal of Operational Research, Elsevier, vol. 300(1), pages 58-72.
    6. Oguzhan VICIL, 2022. "Cost optimization in the $$(S-1, S)$$ ( S - 1 , S ) backorder inventory model with two demand classes and rationing," Flexible Services and Manufacturing Journal, Springer, vol. 34(1), pages 101-124, March.

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