Article ID: | iaor20022144 |
Country: | Netherlands |
Volume: | 25 |
Issue: | 2 |
Start Page Number: | 51 |
End Page Number: | 58 |
Publication Date: | Sep 1999 |
Journal: | Operations Research Letters |
Authors: | Chen Fangruo |
The paper considers a two-stage inventory system where customer demand arises at stage 1, stage 1 replenishes its inventory from stage 2, and stage 2 orders from an outside supplier with unlimited stock. Customer demand is assumed to arrive continuously at a constant rate and is backlogged when stage 1 runs out of stock. There are economies of scale in transferring inventories from the outside supplier to stage 2 or from stage 2 to stage 1. We show that (