IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v265y2023ics0925527323002360.html
   My bibliography  Save this article

A periodic review inventory model facing different disruption profiles

Author

Listed:
  • Karakatsoulis, G.
  • Skouri, K.

Abstract

We study a periodic review inventory system with alternations of periods with supply availability and unavailability. The system is controlled by a periodic review base stock policy (S,T). While periodic review inventory models have been studied assuming supply disruption, they mainly invoke the limiting disruption probabilities overlooking that these probabilities may correspond to different disruption profiles (ranging from rare-long disruptions to frequent-short ones). In this context, we use a continuous-time Markov chain (CTMC), in order to formulate a periodic review inventory model that can distinguish the different disruption profiles. Through theoretical results, we determine the policy variables (order-up-to level and review interval) that minimize the long-run average cost. We show that when the disruption profile is considered, the optimal order-up-to level, although Newsvendor-styled form, is not always linear in the review interval. We present analytical properties demonstrating the impact of the different disruption profiles (under the same limiting disruption probability) and the impact of the limiting probability on the optimal policy. Furthermore, we propose an approximation to obtain a closed-form (near-)optimal solution for the review interval. Finally, numerical comparisons highlight the impact on system's cost performance of deploying approaches that either use the above mentioned closed-form solution for the review interval or the limiting disruption probabilities instead of the time dependent ones in the cost formulation.

Suggested Citation

  • Karakatsoulis, G. & Skouri, K., 2023. "A periodic review inventory model facing different disruption profiles," International Journal of Production Economics, Elsevier, vol. 265(C).
    • Handle: RePEc:eee:proeco:v:265:y:2023:i:c:s0925527323002360
    DOI: 10.1016/j.ijpe.2023.109004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527323002360
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2023.109004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lian Qi & Zuo-Jun Max Shen & Lawrence V. Snyder, 2010. "The Effect of Supply Disruptions on Supply Chain Design Decisions," Transportation Science, INFORMS, vol. 44(2), pages 274-289, May.
    2. Hung-Po Chao, 1987. "Inventory Policy in the Presence of Market Disruptions," Operations Research, INFORMS, vol. 35(2), pages 274-281, April.
    3. Skouri, K. & Konstantaras, I. & Lagodimos, A.G. & Papachristos, S., 2014. "An EOQ model with backorders and rejection of defective supply batches," International Journal of Production Economics, Elsevier, vol. 155(C), pages 148-154.
    4. Mahmut Parlar & Defne Berkin, 1991. "Future supply uncertainty in EOQ models," Naval Research Logistics (NRL), John Wiley & Sons, vol. 38(1), pages 107-121, February.
    5. Chirakiat Saithong & Huynh Trung Luong, 2019. "Effect of supply disruption on inventory policy," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 13(2), pages 178-212.
    6. Konstantaras, I. & Skouri, K. & Lagodimos, A.G., 2019. "EOQ with independent endogenous supply disruptions," Omega, Elsevier, vol. 83(C), pages 96-106.
    7. Mahmut Parlar & David Perry, 1996. "Inventory models of future supply uncertainty with single and multiple suppliers," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(2), pages 191-210, March.
    8. Yu-Sheng Zheng, 1992. "On Properties of Stochastic Inventory Systems," Management Science, INFORMS, vol. 38(1), pages 87-103, January.
    9. Luiza Ribeiro Alves Cunha & Ana Paula Santos Delfino & Kamila Almeida dos Reis & Adriana Leiras, 2018. "Economic production quantity (EPQ) model with partial backordering and a discount for imperfect quality batches," International Journal of Production Research, Taylor & Francis Journals, vol. 56(18), pages 6279-6293, September.
    10. Parlar, Mahmut & Perry, David, 1995. "Analysis of a (Q, r, T) inventory policy with deterministic and random yields when future supply is uncertain," European Journal of Operational Research, Elsevier, vol. 84(2), pages 431-443, July.
    11. Snyder, Lawrence V., 2014. "A tight approximation for an EOQ model with supply disruptions," International Journal of Production Economics, Elsevier, vol. 155(C), pages 91-108.
    12. Argon, Nilay Tanik & Gullu, Refik & Erkip, Nesim, 2001. "Analysis of an inventory system under backorder correlated deterministic demand and geometric supply process," International Journal of Production Economics, Elsevier, vol. 71(1-3), pages 247-254, May.
    13. Hossein Salehi & Ata Allah Taleizadeh & Reza Tavakkoli-Moghaddam, 2016. "An EOQ model with random disruption and partial backordering," International Journal of Production Research, Taylor & Francis Journals, vol. 54(9), pages 2600-2609, May.
    14. Lawrence V. Snyder & Zümbül Atan & Peng Peng & Ying Rong & Amanda J. Schmitt & Burcu Sinsoysal, 2016. "OR/MS models for supply chain disruptions: a review," IISE Transactions, Taylor & Francis Journals, vol. 48(2), pages 89-109, February.
    15. Soheyl Khalilpourazari & Seyed Hamid Reza Pasandideh, 2020. "Multi-objective optimization of multi-item EOQ model with partial backordering and defective batches and stochastic constraints using MOWCA and MOGWO," Operational Research, Springer, vol. 20(3), pages 1729-1761, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Konstantaras, I. & Skouri, K. & Lagodimos, A.G., 2019. "EOQ with independent endogenous supply disruptions," Omega, Elsevier, vol. 83(C), pages 96-106.
    2. Sevgen, Arya & Sargut, F. Zeynep, 2019. "May reorder point help under disruptions?," International Journal of Production Economics, Elsevier, vol. 209(C), pages 61-69.
    3. Taleizadeh, Ata Allah & Tafakkori, Keivan & Thaichon, Park, 2021. "Resilience toward supply disruptions: A stochastic inventory control model with partial backordering under the base stock policy," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    4. Saeed Poormoaied & Ece Zeliha Demirci, 2021. "Analysis of an inventory system with emergency ordering option at the time of supply disruption," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 43(4), pages 1007-1045, December.
    5. Kosuke Kawakami & Hirokazu Kobayashi & Kazuhide Nakata, 2021. "Seasonal Inventory Management Model for Raw Materials in Steel Industry," Interfaces, INFORMS, vol. 51(4), pages 312-324, July.
    6. Sanjoy Kumar Paul & Ruhul Sarker & Daryl Essam, 2018. "A reactive mitigation approach for managing supply disruption in a three-tier supply chain," Journal of Intelligent Manufacturing, Springer, vol. 29(7), pages 1581-1597, October.
    7. Snyder, Lawrence V., 2014. "A tight approximation for an EOQ model with supply disruptions," International Journal of Production Economics, Elsevier, vol. 155(C), pages 91-108.
    8. Gregory A. DeCroix, 2013. "Inventory Management for an Assembly System Subject to Supply Disruptions," Management Science, INFORMS, vol. 59(9), pages 2079-2092, September.
    9. Alptekinoğlu, Aydın & Bhandari, Ashish S. & Sapra, Amar, 2024. "Demand management using responsive pricing and product variety to counter supply chain disruptions," European Journal of Operational Research, Elsevier, vol. 314(3), pages 867-881.
    10. Luangkesorn, K.L. & Klein, G. & Bidanda, B., 2016. "Analysis of production systems with potential for severe disruptions," International Journal of Production Economics, Elsevier, vol. 171(P4), pages 478-486.
    11. Antonio Arreola‐Risa & Gregory A. DeCroix, 1998. "Inventory management under random supply disruptions and partial backorders," Naval Research Logistics (NRL), John Wiley & Sons, vol. 45(7), pages 687-703, October.
    12. Bakal, İsmail Serdar & Bayındır, Z. Pelin & Emer, Deniz Esin, 2017. "Value of disruption information in an EOQ environment," European Journal of Operational Research, Elsevier, vol. 263(2), pages 446-460.
    13. Mahmut Parlar & David Perry, 1996. "Inventory models of future supply uncertainty with single and multiple suppliers," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(2), pages 191-210, March.
    14. Zhang, Yanzi & Diabat, Ali & Zhang, Zhi-Hai, 2021. "Reliable closed-loop supply chain design problem under facility-type-dependent probabilistic disruptions," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 180-209.
    15. Svoboda, Josef & Minner, Stefan & Yao, Man, 2021. "Typology and literature review on multiple supplier inventory control models," European Journal of Operational Research, Elsevier, vol. 293(1), pages 1-23.
    16. Ying Rong & Lawrence V. Snyder & Zuo‐Jun Max Shen, 2017. "Bullwhip and reverse bullwhip effects under the rationing game," Naval Research Logistics (NRL), John Wiley & Sons, vol. 64(3), pages 203-216, April.
    17. Brian M. Lewis & Alan L. Erera & Maciek A. Nowak & White Chelsea C., 2013. "Managing Inventory in Global Supply Chains Facing Port-of-Entry Disruption Risks," Transportation Science, INFORMS, vol. 47(2), pages 162-180, May.
    18. Milad Mohammadi & Alibakhsh Nikzad, 2023. "Sustainable and reliable closed-loop supply chain network design during pandemic outbreaks and disruptions," Operations Management Research, Springer, vol. 16(2), pages 969-991, June.
    19. Bengisu Urlu & Nesim K. Erkip, 2020. "Safety stock placement for serial systems under supply process uncertainty," Flexible Services and Manufacturing Journal, Springer, vol. 32(2), pages 395-424, June.
    20. Nader Azad & Elkafi Hassini, 2019. "A Benders Decomposition Method for Designing Reliable Supply Chain Networks Accounting for Multimitigation Strategies and Demand Losses," Transportation Science, INFORMS, vol. 53(5), pages 1287-1312, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:265:y:2023:i:c:s0925527323002360. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.