Inventory Control with Information About Supply Conditions

Jing-Sheng Song and Paul H. Zipkin
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Jing-Sheng Song: Department of Industrial Engineering and Operations Research, Columbia University, New York, New York 10027
Paul H. Zipkin: Fuqua School of Business, Duke University, Durham, North Carolina 27708-0120

Management Science, 1996, vol. 42, issue 10, 1409-1419

Abstract: This paper presents an inventory-control model which includes a Markovian model of the supply system. As that system evolves over time, so do the replenishment leadtimes. The optimal policy has the same structure as in standard models, but its parameters change dynamically to reflect current supply conditions. In this setting, contrary to conventional wisdom, a longer leadtime does not necessarily imply more inventory. The leadtime is important, but so is a concept we call order coverage.

Keywords: optimal policies; stochastic leadtimes; Markov chains; dynamic programming; state reduction; monotonicity (search for similar items in EconPapers)
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:42:y:1996:i:10:p:1409-1419

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