Periodic inventory model with unstable lead-time and setup cost with backorder discount
by Chandra K. Jaggi, Neetu Arneja
International Journal of Applied Decision Sciences (IJADS), Vol. 3, No. 1, 2010

Abstract: The main purpose of this study is to investigate the periodic inventory model with backorder price discounts, where shortages are partially backlogged. The application of just-in-time (JIT) philosophy i.e., crashing of the lead-time and setup cost has been carried component wise. Two cases have been discussed viz: 1) protection interval demand distribution is known (normal distribution approach); 2) protection level demand distribution is unknown (minimax distribution approach). An algorithm has been developed which jointly optimises the review period, the backorder price discount, the setup cost and lead-time for a known service level. Numerical results clearly indicate that significant savings could be achieved.

Online publication date: Wed, 17-Mar-2010

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