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Lead time and ordering cost reductions in continuous review inventory systems with partial backorders

Author

Listed:
  • L-Y Ouyang

    (Tamkang University)

  • C-K Chen

    (Tamkang University)

  • H-C Chang

    (Tamkang University)

Abstract

This paper investigates the impact of ordering cost reduction on the modified continuous review inventory systems involving variable lead time with a mixture of backorders and lost sales. The objective is to simultaneously optimise the order quantity, ordering cost, reorder point and lead time. We first assume the lead time demand follows a normal distribution, then relax this assumption to consider the distribution free case where only the mean and variance of lead time demands are known. An algorithm procedure of finding the optimal solution is developed, and two numerical examples are given to illustrate the results.

Suggested Citation

  • L-Y Ouyang & C-K Chen & H-C Chang, 1999. "Lead time and ordering cost reductions in continuous review inventory systems with partial backorders," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 50(12), pages 1272-1279, December.
    • Handle: RePEc:pal:jorsoc:v:50:y:1999:i:12:d:10.1057_palgrave.jors.2600840
    DOI: 10.1057/palgrave.jors.2600840
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    Citations

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    Cited by:

    1. M. Vijayashree & R. Uthayakumar, 2016. "Two-echelon supply chain inventory model with controllable lead time," 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. 7(1), pages 112-125, December.
    2. Chang, Hung-Chi & Ouyang, Liang-Yuh & Wu, Kun-Shan & Ho, Chia-Huei, 2006. "Integrated vendor-buyer cooperative inventory models with controllable lead time and ordering cost reduction," European Journal of Operational Research, Elsevier, vol. 170(2), pages 481-495, April.
    3. Karuppuchamy Annadurai & Ramasamy Uthayakumar, 2014. "Ordering Cost Reduction in Inventory Model with Defective Items and Backorder Price Discount," Journal of Optimization, Hindawi, vol. 2014, pages 1-14, November.
    4. Ouyang, Liang-Yuh & Wu, Kun-Shan & Ho, Chia-Huei, 2004. "Integrated vendor-buyer cooperative models with stochastic demand in controllable lead time," International Journal of Production Economics, Elsevier, vol. 92(3), pages 255-266, December.
    5. Hoque, Mohammad A. & Goyal, Suresh K., 2006. "A heuristic solution procedure for an integrated inventory system under controllable lead-time with equal or unequal sized batch shipments between a vendor and a buyer," International Journal of Production Economics, Elsevier, vol. 102(2), pages 217-225, August.
    6. Tiwari, Sunil & Kazemi, Nima & Modak, Nikunja Mohan & Cárdenas-Barrón, Leopoldo Eduardo & Sarkar, Sumon, 2020. "The effect of human errors on an integrated stochastic supply chain model with setup cost reduction and backorder price discount," International Journal of Production Economics, Elsevier, vol. 226(C).
    7. K. F. Mary Latha & M. Ganesh Kumar & R. Uthayakumar, 2021. "Two echelon economic lot sizing problems with geometric shipment policy backorder price discount and optimal investment to reduce ordering cost," OPSEARCH, Springer;Operational Research Society of India, vol. 58(4), pages 1133-1163, December.
    8. Lin, Yu-Jen, 2008. "Minimax distribution free procedure with backorder price discount," International Journal of Production Economics, Elsevier, vol. 111(1), pages 118-128, January.
    9. Anuraag Gutgutia & J. K. Jha, 2018. "A closed-form solution for the distribution free continuous review integrated inventory model," Operational Research, Springer, vol. 18(1), pages 159-186, April.

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