TY - JOUR

T1 - A note on periodic review inventory models with stochastic supplier's visit intervals and fixed ordering cost

AU - Chiang, Chi

PY - 2013/12/1

Y1 - 2013/12/1

N2 - Most periodic review models in the inventory literature have assumed a fixed length of the review periods. In this note, we extend the work of Chiang (2008), and consider backlogged and lost-sales periodic review models where the review periods are of a variable length and there is a fixed cost of ordering for replenishment. Assuming that period lengths are independently and identically distributed, we show (using an exact method of computing inventory holding costs) that an (s, S) policy is optimal for the infinite horizon problem. The periodic review policies developed are thus easy to implement. The computation shows that if the fixed cost of ordering is small, one needs to use the proposed periodic policies.

AB - Most periodic review models in the inventory literature have assumed a fixed length of the review periods. In this note, we extend the work of Chiang (2008), and consider backlogged and lost-sales periodic review models where the review periods are of a variable length and there is a fixed cost of ordering for replenishment. Assuming that period lengths are independently and identically distributed, we show (using an exact method of computing inventory holding costs) that an (s, S) policy is optimal for the infinite horizon problem. The periodic review policies developed are thus easy to implement. The computation shows that if the fixed cost of ordering is small, one needs to use the proposed periodic policies.

KW - Compound Poisson

KW - Dynamic programming

KW - Inventory model

KW - Lost-sales

KW - Periodic review

UR - http://www.scopus.com/inward/record.url?scp=84886722058&partnerID=8YFLogxK

U2 - 10.1016/j.ijpe.2013.08.014

DO - 10.1016/j.ijpe.2013.08.014

M3 - Article

AN - SCOPUS:84886722058

VL - 146

SP - 662

EP - 666

JO - International Journal of Production Economics

JF - International Journal of Production Economics

SN - 0925-5273

IS - 2

ER -