A partial backorder control for continuous review (r,Q) inventory system with Poisson demand and constant lead time

A partial backorder control for continuous review (r,Q) inventory system with Poisson demand and constant lead time

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Article ID: iaor19951994
Country: United Kingdom
Volume: 22
Issue: 7
Start Page Number: 689
End Page Number: 700
Publication Date: Aug 1995
Journal: Computers and Operations Research
Authors: , , ,
Abstract:

In this paper, the authors consider the partial backorder policy used in conjunction with the traditional stochastic (r,Q) inventory system. The partial backorder control is modeled using a control variable, b, which limits the maximum number of backorders allowed to be accumulated in any given cycle. In traditional inventory control policies, the unsatisfied demands are either completely backordered or completely lost. The new control variable b provides an alternative to dealing with shortages, which is different from the two extremes policies: the pure backorder policy (which corresponds to b=•) and the lost sales policy (b=0). The authors obtain the expected annual cost of the model and give a procedure to compute the optimal parameters, r*,b* and Q*. Numerical examples which demonstrate the advantage of implementing the partial backorder policy are presented and the percentage of cost savings depends on the fill rate.

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