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Technical Note—The EOQ Model under Stochastic Lead Time

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  • Matthew J. Liberatore

    (FMC Corporation, Princeton, New Jersey)

Abstract

We consider a continuous deterministic-demand, stochastic lead-time inventory model such that the individual unit demands are non-interchangeable. We derive equations that define the optimal values of the two decision variables: order size and timing. This model is shown to be a stochastic lead-time generalization of the EOQ model with backlogging of demand. An illustrative example is presented. Finally, a lower bound, which is independent of the order size, is developed for the optimal ordering time.

Suggested Citation

  • Matthew J. Liberatore, 1979. "Technical Note—The EOQ Model under Stochastic Lead Time," Operations Research, INFORMS, vol. 27(2), pages 391-396, April.
    • Handle: RePEc:inm:oropre:v:27:y:1979:i:2:p:391-396
    DOI: 10.1287/opre.27.2.391
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    Cited by:

    1. Ben-Ammar, Oussama & Bettayeb, Belgacem & Dolgui, Alexandre, 2019. "Optimization of multi-period supply planning under stochastic lead times and a dynamic demand," International Journal of Production Economics, Elsevier, vol. 218(C), pages 106-117.
    2. Chatfield, Dean C. & Pritchard, Alan M., 2018. "Crossover aware base stock decisions for service-driven systems," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 312-330.
    3. Jeon G. Kim & Daewon Sun & Xin James He & Jack C. Hayya, 2004. "The (s, Q) inventory model with Erlang lead time and deterministic demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 51(6), pages 906-923, September.
    4. Xin X. He & Susan H. Xu & J. Keith Ord & Jack C. Hayya, 1998. "An Inventory Model with Order Crossover," Operations Research, INFORMS, vol. 46(3-supplem), pages 112-119, June.
    5. Thomas Wensing & Heinrich Kuhn, 2015. "Analysis of production and inventory systems when orders may cross over," Annals of Operations Research, Springer, vol. 231(1), pages 265-281, August.

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