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: | Erkip Nesim, Gll Refik, nol Ebru |
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.