A supply chain model with two delivery modes and forecast updates

This paper is concerned with a periodic review inventory system with fast and slow delivery modes and regular demand forecast updates. To get more insights about how the cost parameters and the forecast accuracy impact on the optimal order quantities and the optimal expected total cost, we consider the case in which the time horizon equals 2. By using the dynamic programming method the optimal policy is obtained. For uniformly distributed demand forecasts, the explicit expressions of the optimal order quantities and the optimal expected total cost are provided. Several tables and figures are given to more formally illustrate how the holding cost, the penalty cost, the forecasting improvement factors and the forecasting errors impact on the optimal order quantities and the optimal expected total cost.