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Zbl 1201.90013
Lin, Yu-Jen
A stochastic periodic review integrated inventory model involving defective items, backorder price discount, and variable lead time. (English)
[J] 4OR 8, No. 3, 281-297 (2010). ISSN 1619-4500; ISSN 1614-2411/e

Summary: The purpose of this article is to investigate a stochastic integrated supplier-retailer inventory problem. The model analyzed in this article explores the problem of the protection interval, the backorder price discount, the lead time, and the numbers of shipments from the supplier to the retailer in one production run as control variables to widen applications for an integrated periodic review inventory model. We consider the situation in which the supplier and the retailer establish a long-term strategic partnership and contract to jointly determine the best strategy. We assume that the protection interval demand follows a normal distribution. Our objective is to determine the optimal review period, the optimal backorder price discount, the optimal lead time, and the optimal number of shipments from the supplier to the retailer in one production run, so that the joint expected annual total cost incurred has the minimum value. Furthermore, an algorithm of finding the optimal solution is developed. Also, the sensitivity analysis included and a numerical example is given to illustrate the results of the proposed model.

MSC 2000:: *90B05 Inventory management

Keywords: integrated inventory model; periodic review; protection interval; backorder price discount; lead time

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Zentralblatt MATH Berlin [Germany]