A periodic review order-up-to inventory policy in the presence of stochastic supply disruption

Chirakiat Saithong and Huynh Trung Luong

International Journal of Industrial and Systems Engineering, 2022, vol. 40, issue 2, 181-199

Abstract: In many supply chains, supply disruptions may lead to interruption of a firm's operation and produce huge damage to the firm's performance. Thus, the firm should deal with those disruptions through adopting appropriate strategies. Inventory holding approach is appropriate which holds inventory more than usual in order to respond demand during supply disruption period. In this study, we study a system which comprises a supplier, who is facing with disruption, and a retailer. The problem of interest is to help the retailer derive the optimal inventory policy in the presence of stochastic supply disruption which minimises total costs per time unit in a periodic review order-up-to setting. Replenishment lead time is also considered in our problem. Numerical experiments are conducted to illustrate the applicability of the proposed model.

Keywords: periodic review; order-up-to inventory policy; supply disruption; stochastic demand; stochastic supply. (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijisen:v:40:y:2022:i:2:p:181-199

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