A modified (s,S) inventory system with lost sales and emergency orders

This paper analyses a lost sales inventory system with renewal demands where in addition to the usual (s,S) ordering policy, items are also procured on an emergency basis, at the time of stock out, if available. Explicit expressions for the various operating characteristics are obtained. Also the problem of minimizing the long-run expected cost rate is discussed. Conditions under which emergency procurement of buffer stock is preferable to the usual (s,S) ordering policy is established. All the results are illustrated numerically.