Inventory models with a mixture of backorders and lost sales

Douglas C. Montgomery, M. S. Bazaraa and Ajit K. Keswani

Naval Research Logistics Quarterly, 1973, vol. 20, issue 2, 255-263

Abstract: This article presents several single‐echelon, single‐item, static demand inventory models for situations in which, during the stockout period, a fraction b of the demand is backordered and the remaining fraction 1 ‐ b is lost forever. Both deterministic and stochastic demand are considered. although the case of stochastic demand is treated heuristically. In each situation, a mathematical model representing the average annual cost of operating the inventory system is developed. and an optimum operating policy derived. At the extremes b=1 and b=0 the models presented reduce to the usual backorders and lost sales cases, respectively.

Date: 1973
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https://doi.org/10.1002/nav.3800200205

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Persistent link: https://EconPapers.repec.org/RePEc:wly:navlog:v:20:y:1973:i:2:p:255-263

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