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A continuous‐review inventory model with constant resupply time and defective items

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  • Kamran Moinzadeh
  • Hau L. Lee

Abstract

As a result of imperfect production and inspection by suppliers, pilferage, and/or damage in transit, it is common that procurement orders may contain defective items. This article deals with a continuous‐review inventory system with Poisson demand arrivals and constant resupply time. Items in resupply lots may not be of perfect quality. The operating characteristics of such a system are analyzed. For purposes of computational savings, an approximation scheme for the operating characteristics is presented. As a result of the approximation, the determination of the optimal ordering policy becomes much simpler. Extensive numerical tests suggest that the approximation scheme is very effective in giving the optimal or near‐optimal ordering policies for such a system.

Suggested Citation

  • Kamran Moinzadeh & Hau L. Lee, 1987. "A continuous‐review inventory model with constant resupply time and defective items," Naval Research Logistics (NRL), John Wiley & Sons, vol. 34(4), pages 457-467, August.
    • Handle: RePEc:wly:navres:v:34:y:1987:i:4:p:457-467
    DOI: 10.1002/1520-6750(198708)34:43.0.CO;2-O
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    Cited by:

    1. Narendra Agrawal & Steven Nahmias, 1997. "Rationalization Of The Supplier Base In The Presence Of Yield Uncertainty," Production and Operations Management, Production and Operations Management Society, vol. 6(3), pages 291-308, September.
    2. Ki Ling Cheung & Alex X. Zhang, 1999. "The impact of inventory information distortion due to customer order cancellations," Naval Research Logistics (NRL), John Wiley & Sons, vol. 46(2), pages 213-231, March.
    3. Yigal Gerchak & Mahmut Parlar, 1990. "Yield randomness, cost tradeoffs, and diversification in the EOQ model," Naval Research Logistics (NRL), John Wiley & Sons, vol. 37(3), pages 341-354, June.
    4. Srinivas Bollapragada & Thomas E. Morton, 1999. "Myopic Heuristics for the Random Yield Problem," Operations Research, INFORMS, vol. 47(5), pages 713-722, October.
    5. Bardia Kamrad & Keith Ord, 2006. "Market risk and process uncertainty in production operations," Naval Research Logistics (NRL), John Wiley & Sons, vol. 53(7), pages 627-640, October.

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