Title: Optimal base-stock policy for the inventory system with periodic review, backorders and sequential lead times

Authors: Soren Glud Johansen, Anders Thorstenson

Addresses: Department of Operations Research, University of Aarhus, Ny Munkegade, Bldg. 530, DK-8000 Aarhus C, Denmark. ' CORAL – Centre for OR Applications in Logistics, Department of Business Studies, Aarhus School of Business, University of Aarhus, Fuglesangs Alle 4, DK-8210 Aarhus V, Denmark

Abstract: We extend well-known formulae for the optimal base stock of the inventory system with continuous review and constant lead time to the case with periodic review and stochastic, sequential lead times. Our extension uses the notion of the |extended lead time|. The derived performance measures are exact for Poisson demands.

Keywords: inventory control; optimisation; periodic review; sequential lead times; single echelon; single item; stochastic demand; base stock policy; backorders; extended lead time; performance measures; optimal base stock.

DOI: 10.1504/IJIR.2008.019207

International Journal of Inventory Research, 2008 Vol.1 No.1, pp.44 - 52

Published online: 02 Jul 2008 *

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