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Emergency orders in the periodic-review inventory system with fixed ordering costs and stochastic lead times for normal orders

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  • Johansen, Søren Glud

Abstract

This paper presents various periodic review policies for inventory control of a single item facing compound Poisson demand. Emergency orders are controlled by a reorder point policy with a target stock level, whereas normal orders are issued according to a reorder point policy with a fixed order quantity. We assume that emergency orders have a short constant lead time and are more expensive than normal orders for which the extra lead time is specified as a stochastic multiple of the review period. In addition to variable and fixed costs for emergency orders and fixed costs for normal orders, our model includes linear holding and backlogging costs.

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  • Johansen, Søren Glud, 2019. "Emergency orders in the periodic-review inventory system with fixed ordering costs and stochastic lead times for normal orders," International Journal of Production Economics, Elsevier, vol. 209(C), pages 205-214.
    • Handle: RePEc:eee:proeco:v:209:y:2019:i:c:p:205-214
    DOI: 10.1016/j.ijpe.2018.01.017
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