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A note on periodic review inventory models with stochastic supplier’s visit intervals and fixed ordering cost

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  • Chiang, Chi

Abstract

Most periodic review models in the inventory literature have assumed a fixed length of the review periods. In this note, we extend the work of Chiang (2008) , and consider backlogged and lost-sales periodic review models where the review periods are of a variable length and there is a fixed cost of ordering for replenishment. Assuming that period lengths are independently and identically distributed, we show (using an exact method of computing inventory holding costs) that an (s, S) policy is optimal for the infinite horizon problem. The periodic review policies developed are thus easy to implement. The computation shows that if the fixed cost of ordering is small, one needs to use the proposed periodic policies.

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  • Chiang, Chi, 2013. "A note on periodic review inventory models with stochastic supplier’s visit intervals and fixed ordering cost," International Journal of Production Economics, Elsevier, vol. 146(2), pages 662-666.
    • Handle: RePEc:eee:proeco:v:146:y:2013:i:2:p:662-666
    DOI: 10.1016/j.ijpe.2013.08.014
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    References listed on IDEAS

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    1. Chiang, Chi, 2008. "Periodic review inventory models with stochastic supplier's visit intervals," International Journal of Production Economics, Elsevier, vol. 115(2), pages 433-438, October.
    2. Arthur F. Veinott, Jr. & Harvey M. Wagner, 1965. "Computing Optimal (s, S) Inventory Policies," Management Science, INFORMS, vol. 11(5), pages 525-552, March.
    3. Ertogral, Kadir & Rahim, M.A., 2005. "Replenish-up-to inventory control policy with random replenishment intervals," International Journal of Production Economics, Elsevier, vol. 93(1), pages 399-405, January.
    4. Prajogo, Daniel & Chowdhury, Mesbahuddin & Yeung, Andy C.L. & Cheng, T.C.E., 2012. "The relationship between supplier management and firm's operational performance: A multi-dimensional perspective," International Journal of Production Economics, Elsevier, vol. 136(1), pages 123-130.
    5. Tang, Ou & Nurmaya Musa, S., 2011. "Identifying risk issues and research advancements in supply chain risk management," International Journal of Production Economics, Elsevier, vol. 133(1), pages 25-34, September.
    6. Donald L. Iglehart, 1963. "Optimality of (s, S) Policies in the Infinite Horizon Dynamic Inventory Problem," Management Science, INFORMS, vol. 9(2), pages 259-267, January.
    7. Yu-Sheng Zheng & A. Federgruen, 1991. "Finding Optimal (s, S) Policies Is About As Simple As Evaluating a Single Policy," Operations Research, INFORMS, vol. 39(4), pages 654-665, August.
    8. Chiang, Chi, 2007. "Optimal ordering policies for periodic-review systems with a refined intra-cycle time scale," European Journal of Operational Research, Elsevier, vol. 177(2), pages 872-881, March.
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    Cited by:

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    2. Nouri, Mina & Hosseini-Motlagh, Seyyed-Mahdi & Nematollahi, Mohammadreza & Sarker, Bhaba R., 2018. "Coordinating manufacturer's innovation and retailer's promotion and replenishment using a compensation-based wholesale price contract," International Journal of Production Economics, Elsevier, vol. 198(C), pages 11-24.
    3. Taleizadeh, Ata Allah & Zarei, Hamid Reza & Sarker, Bhaba R., 2017. "An optimal control of inventory under probablistic replenishment intervals and known price increase," European Journal of Operational Research, Elsevier, vol. 257(3), pages 777-791.

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