On the economic application of airlift to product distribution and its impact on inventory levels

Donald Gross and A. Soriano

Naval Research Logistics Quarterly, 1972, vol. 19, issue 3, 501-507

Abstract: In many resupply situations, the decisionmaker has the option of “purchasing” faster replenishment leadtimes. For example, a premium may be paid for delivery by parcel post rather than slower but less expensive delivery by railway express. It may be economically advantageous to pay shipment premiums for faster leadtimes when considering the possible cost reductions in pipeline (on‐order) inventory and safety stock levels. This paper develops a decision rule which, for any given item, will indicate whether it is economically advantageous to purchase a faster leadtime. The general methodology is then applied to a peacetime military resupply operation involving several million items, each requiring a decision as to whether the item should be shipped by air or sea.

Date: 1972
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Persistent link: https://EconPapers.repec.org/RePEc:wly:navlog:v:19:y:1972:i:3:p:501-507

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