On the (Q,r) policy for perishables with positive lead times and multiple outstanding orders

Date
2020-01
Editor(s)
Advisor
Supervisor
Co-Advisor
Co-Supervisor
Instructor
Source Title
Annals of Operations Research
Print ISSN
0254-5330
Electronic ISSN
Publisher
Springer New York LLC
Volume
284
Issue
1
Pages
81 - 98
Language
English
Journal Title
Journal ISSN
Volume Title
Series
Abstract

We consider an inventory system for perishables with fixed lifetimes, positive replenishment lead times and lost sales in the presence of non-negligible fixed ordering costs. The system is studied under the lotsize reorder level (Q, r) policy. An exact analysis of this system based on the stationary distribution of the remaining lifetime process is provided by Berk and Gürler (Oper Res 56(5):1238-1246, 2008) under the restriction that there is at most one outstanding order at any time (r< Q). In this work, we generalize their results to allow for more than one outstanding orders (r≥ Q). We provide the operating characteristics of the inventory system and construct the exact expected cost rate expression using a renewal theoretic approach. An illustrative numerical study indicates that allowing for multiple outstanding orders (r≥ Q) may result in significant savings in the expected cost rate, compared to the case with r< Q. In particular, when the fixed lifetimes are short and the ordering costs are low, expected costs can be reduced by more than half.

Course
Other identifiers
Book Title
Citation
Published Version (Please cite this version)