Analysis of a deterministic demand production/inventory system under nonstationary supply uncertainty

Analysis of a deterministic demand production/inventory system under nonstationary supply uncertainty

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Article ID: iaor19992192
Country: United States
Volume: 29
Issue: 8
Start Page Number: 703
End Page Number: 709
Publication Date: Aug 1997
Journal: IIE Transactions
Authors: , ,
Abstract:

In this article we investigate a periodic review inventory model under deterministic dynamic demand and supply unavailability. In a given period, supply is either available or completely unavailable with given probabilities. Supply unavailability probabilities are nonstationary over time. We show the optimality of an order-up-to level policy, and obtain a newsboy-like formula that determines the optimal order-up-to levels. Our formula would provide guidance as to the appropriate amount of inventory to stock in the face of uncertainties in the supply process.

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