The Effect of Lead Time and Demand Uncertainties in ( r, q ) Inventory Systems

Jing-Sheng Song (), Hanqin Zhang (), Yumei Hou () and Mingzheng Wang ()
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Jing-Sheng Song: The Fuqua School of Business, Duke University, Durham, North Carolina 27708, and Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai 200052, China
Hanqin Zhang: Institute of Applied Mathematics, Academia Sinica, Beijing 100080, China, and Business School, National University of Singapore, Singapore
Yumei Hou: Yanshan University, Qinhuangdao 066004, Hebei Province, China
Mingzheng Wang: Dalian University of Technology, Dalian 116024, China

Operations Research, 2010, vol. 58, issue 1, 68-80

Abstract: We study a single-item (r, q) inventory system, where r is the reorder point and q is the order quantity. The demand is a compound-Poisson process. We investigate the behavior of the optimal policy parameters and the long-run average cost of the system in response to stochastically shorter or less-variable lead times. We show that although some of the properties of the base-stock system can be extended to this more general model, some cannot. The same findings also apply when the comparison is conducted on the lead-time demand distributions.

Keywords: inventory system; reorder-point/order quantity; stochastic lead time; variability; optimal policy; stochastic comparison (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (17)

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