Article ID: | iaor20083584 |
Country: | Netherlands |
Volume: | 175 |
Issue: | 2 |
Start Page Number: | 992 |
End Page Number: | 1008 |
Publication Date: | Dec 2006 |
Journal: | European Journal of Operational Research |
Authors: | Mohebbi Esmail, Hao Daipeng |
Keywords: | supply & supply chains |
This paper presents an exact treatment of a continuous-review inventory system with compound Poisson demand, Erlang-distributed lead times and random supply interruptions. In contrast with the existing models in the literature, we take into account the supplier's availability in characterizing the lead time of a replenishment order. Assuming that the supplier's availability can be described by a continuous-time homogeneous Markov chain with two states (on and off) and that stockouts are lost, we derive the stationary distribution of the inventory level (stock-on-hand) under an (