Customer-order information, leadtimes, and inventories

Customer-order information, leadtimes, and inventories

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Article ID: iaor199732
Country: United States
Volume: 41
Issue: 10
Start Page Number: 1599
End Page Number: 1607
Publication Date: Oct 1995
Journal: Management Science
Authors: ,
Keywords: information
Abstract:

The authors have an inventory to manage. The scenario is standard in all respects save one: Instead of arriving unannounced, customers provide advance warning of their demands. How should the authors use this information, and what is its effect on system performance? The answers turn out to be strikingly simple: There are very simple policies which perform effectively, in some cases optimally. Also, such ‘demand leadtimes’ improve performance, in precisely the same way that replenishment leadtimes degrade it.

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