A periodic review inventory model with two delivery modes, fractional lead-times, and age-and-period-dependent backlogging costs

Suresh Chand, Jian Li and Yanyi Xu

International Journal of Production Economics, 2016, vol. 173, issue C, 199-206

Abstract: We examine a periodic review inventory model where the buyer has access to a mix of two delivery modes for the quantity it orders in a period; these include an emergency delivery mode that delivers instantaneously and a regular delivery mode that delivers within the length of the review period. The unmet demand is backordered and charged a backlogging cost that varies with the length of the backlogging time. The excess inventory is charged a holding cost. The unit costs for the delivery modes could be different. We show that the well-known base-stock policy structure remains optimal for this problem under mild conditions.

Keywords: Stochastic inventory model; Two delivery modes; Fractional lead-time; Age-and-period-dependent backlogging cost (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:173:y:2016:i:c:p:199-206

DOI: 10.1016/j.ijpe.2015.12.002

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