Investing in reducing lead-time randomness in continuous-review inventory models

Investing in reducing lead-time randomness in continuous-review inventory models

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Article ID: iaor19911464
Country: Netherlands
Volume: 21
Issue: 2
Start Page Number: 191
End Page Number: 197
Publication Date: May 1991
Journal: Engineering Costs and Production Economics
Authors: ,
Abstract:

The authors consider the selection of optimal lead time variability in continuous review inventory models. The variability level is optimized jointly with the lot size and reorder point, where lower variability can be achieved at an extra cost. Low variabilities may correspond to more reliable sources or production processes, and their attainment is one of the implicit goals of JIT logistics. The authors analyze the resulting tri-variate models, providing sufficient conditions for joint convexity, and hence unique optimum, an algorithm and illustrative examples.

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