Title: Periodic review integrated inventory model with controllable lead time and setup cost in the presence of a service level constraint

Authors: Fu Huang; Huaming Song

Addresses: School of Economics and Management, Nanjing University of Science and Technology, Nanjing 210094, China ' School of Economics and Management, Nanjing University of Science and Technology, Nanjing 210094, China

Abstract: The impact of lead time reduction on an integrated periodic review inventory system comprising a single vendor and multiple buyers with a step crashing cost function and service level constraints is explored in this study. Distribution free and normal distribution procedure with Lagrange multipliers is applied to determining the lead time, the common shipment cycle time, the target levels of replenishments and the number of shipments per production cycle so that the expected total system cost is minimised. The efficient algorithm is constructed to find the optimal lead time, the common shipment cycle time, the target levels of replenishments and the number of shipments per production cycle simultaneously. Moreover, the numerical example is introduced to illustrate the proposed model. Through sensitivity analysis, some observations and managerial implications are provided.

Keywords: inventory; integrated model; lead time; service level.

DOI: 10.1504/IJSTM.2020.110369

International Journal of Services Technology and Management, 2020 Vol.26 No.6, pp.478 - 501

Received: 13 Mar 2017
Accepted: 28 Feb 2018

Published online: 01 May 2020 *

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