Controllable lead time, service level constraint, and transportation discounts in a continuous review inventory model

2016 ◽  
Vol 50 (4-5) ◽  
pp. 921-934 ◽  
Author(s):  
Dongmin Shin ◽  
Rekha Guchhait ◽  
Biswajit Sarkar ◽  
Mandeep Mittal
Keyword(s):  
Lead Time ◽  
Service Level ◽  
Inventory Model ◽  
Time Service ◽  
Continuous Review ◽  
Controllable Lead Time

scholarly journals Distribution-Free Continuous Review Inventory Model with Controllable Lead Time and Setup Cost in the Presence of a Service Level Constraint

2012 ◽  
Vol 2012 ◽  
pp. 1-16 ◽  
Author(s):  
Wei-Min MA ◽  
Bing-Bing QIU
Keyword(s):  
Lead Time ◽  
Programming Model ◽  
Lagrange Function ◽  
Service Level ◽  
Solution Algorithm ◽  
Setup Cost ◽  
Worst Case ◽  
Continuous Review ◽  
Proposed Model ◽  
Controllable Lead Time

Based on the mean and the standard deviation of lead time demand, and also taking the difficulty in measuring shortage cost into consideration, we investigate the joint decision problem of continuous review inventory in which a service level constraint should be satisfied. Under the assumption of controllable lead time and setup cost, a mathematical programming model is established. The objective function of the proposed model is the total expected annual cost and the constraint guarantees that the service level requirement can be satisfied at the worst case. Subsequently, an equivalent nonlinear programming model is derived. By constructing Lagrange function, the analysis regarding the solution procedure is conducted, and a solution algorithm is then provided. Moreover, a numerical example is introduced to illustrate the proposed model and solution algorithm. Through sensitivity analysis, some observations and managerial implications are provided.

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