An inventory model with two suppliers under yield uncertainity

Abstract

In this study, an inventory model with one retailer and two suppliers is considered for a single item. Di erent from most of the models in inventory literature, we do not make the assumption that we receive all the quantity that we ordered. It is assumed that a random fraction of the lot size is actually delivered by the suppliers. Hence, the model is constructed under yield uncertainty for both binomial yield and stochastically proportional yield model. The demand rate is constant, and backordering is allowed. The ob jective is to minimize the long-run average cost and nd the near optimal values for the decision variables; order quantities and reorder point. Furthermore, the regions where diversi cation among suppliers is bene cial are investigated. The results are generalized to \M" suppliers (M>2) and solution method is proposed. Finally, experimental study is carried out for the two-suppliers problem.