A (Q,R) inventory model with lost sales and erlang‐distributed lead times

David J. Buchanan and Robert F. Love

Naval Research Logistics Quarterly, 1985, vol. 32, issue 4, 605-611

Abstract: The exact expression is derived for the average stationary cost of a (Q,R) inventory system with lost sales, unit Poisson demands, Erlang‐distributed lead times, fixed order cost, fixed cost per unit lost sale, linear holding cost per unit time, and a maximum of one order outstanding. Explicit expressions for the state probabilities and a fast method of calculating them are obtained for the case of Q greater than R. Exponential lead times are analyzed as a special case. A simple cyclic coordinate search procedure is used to locate the minimum cost policy. Examples of the effect of lead time variability on costs are given.

Date: 1985
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https://doi.org/10.1002/nav.3800320407

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Persistent link: https://EconPapers.repec.org/RePEc:wly:navlog:v:32:y:1985:i:4:p:605-611

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