On the benefits of delayed ordering

A.A. Syntetos, R.H. Teunter, M.Z. Babai and S. Transchel

European Journal of Operational Research, 2016, vol. 248, issue 3, 963-970

Abstract: Practical experience and scientific research show that there is scope for improving the performance of inventory control systems by delaying a replenishment order that is otherwise triggered by generalised and all too often inappropriate assumptions. This paper presents the first analysis of the most commonly used continuous (s, S) policies with delayed ordering for inventory systems with compound demand. We analyse policies with a constant delay for all orders as well as more flexible policies where the delay depends on the order size. For both classes of policies and general demand processes, we derive optimality conditions for the corresponding delays. In a numerical study with Erlang distributed customer inter-arrival times, we compare the cost performance of the optimal policies with no delay, a constant delay and flexible delays. Sensitivity results provide insights into when the benefit of delaying orders is most pronounced, and when applying flexible delays is essential.

Keywords: Inventory control; Delayed ordering; Intermittent demand; (s, S) policy; Marginal cost analysis (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377221715007201
Full text for ScienceDirect subscribers only

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:eee:ejores:v:248:y:2016:i:3:p:963-970

DOI: 10.1016/j.ejor.2015.08.003

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().