Article ID: | iaor1989427 |
Country: | United Kingdom |
Volume: | 40 |
Issue: | 8 |
Start Page Number: | 769 |
End Page Number: | 780 |
Publication Date: | Aug 1989 |
Journal: | Journal of the Operational Research Society |
Authors: | Reyniers Diane J. |
The paper considers the problem of supplying perishable goods to disloyal customers. As in traditional stock-control literature, a penalty is incurred whenever there is a stockout. However, in contrast to mainstream models, loss of goodwill is explicitly treated by incorporating the behavioural assumption that a fixed proportion of unsatisfied demand is lost forever after each stockout. The problem consists of finding supply levels which minimize costs of over- and underproduction, given unknown but deterministic demand. The paper derives optimal adaptive search procedures under varying assumptions of