Economics at your fingertips  

Inventory models with unreliable suppliersin a random environment

S. Özekici and M. Parlar

Annals of Operations Research, 1999, vol. 91, issue 0, 123-136

Abstract: We consider infinite‐horizon periodic‐review inventory models with unreliable supplierswhere the demand, supply and cost parameters change with respect to a randomly changingenvironment. Although our analysis will be in the context of an inventory model, it is alsoappropriate for production systems with unreliable machines where planning is done ona periodic basis. It is assumed that the environmental process follows a Markov chain.The stock‐flow equations of the inventory system subject to environmental fluctuations isrepresented using a two‐dimensional stochastic process. We show that an environment‐dependentorder‐up‐to level (i.e., base‐stock) policy is optimal when the order cost is linearin order quantity. When there is also a fixed cost of ordering, we show that a two‐parameterenvironment‐dependent (s, S) policy is optimal under reasonable conditions. We also discusscomputational issues and some extensions. Copyright Kluwer Academic Publishers 1999

Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (28) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

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:

Ordering information: This journal article can be ordered from

DOI: 10.1023/A:1018937420735

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2020-04-23
Handle: RePEc:spr:annopr:v:91:y:1999:i:0:p:123-136:10.1023/a:1018937420735