Title: Periodic inventory model with unstable lead-time and setup cost with backorder discount

Authors: Chandra K. Jaggi, Neetu Arneja

Addresses: Department of Operational Research, Faculty of Mathematical Sciences, University of Delhi, Delhi-110007, India. ' Department of Operational Research, Faculty of Mathematical Sciences, University of Delhi, Delhi-110007, India

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.

Keywords: periodic inventories; setup costs; unstable lead-times; crashing costs; backorder price discounts; shortages; just-in-time; JIT manufacturing; components; protection intervals; demand distribution; normal distribution; protection levels; minimax distribution; algorithms; review periods; service levels; savings; applied decision sciences.

DOI: 10.1504/IJADS.2010.032240

International Journal of Applied Decision Sciences, 2010 Vol.3 No.1, pp.53 - 73

Available online: 17 Mar 2010 *

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