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

Wei-Min Ma and Bing-Bing Qiu

Mathematical Problems in Engineering, 2012, vol. 2012, 1-16

Abstract:

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.

Date: 2012
References: Add references at CitEc
Citations:

Downloads: (external link)
http://downloads.hindawi.com/journals/MPE/2012/867847.pdf (application/pdf)
http://downloads.hindawi.com/journals/MPE/2012/867847.xml (text/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hin:jnlmpe:867847

DOI: 10.1155/2012/867847

Access Statistics for this article

More articles in Mathematical Problems in Engineering from Hindawi
Bibliographic data for series maintained by Mohamed Abdelhakeem ().