Policies utilizing tactical inventory for service-differentiated customers

Policies utilizing tactical inventory for service-differentiated customers

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Article ID: iaor2009814
Country: Netherlands
Volume: 36
Issue: 2
Start Page Number: 259
End Page Number: 264
Publication Date: Mar 2008
Journal: Operations Research Letters
Authors: , , ,
Abstract:

We consider a manufacturer serving two customer classes where one wants the item immediately and the second receives a discount to accept a delay. We show that an (S,R,B) base-stock policy is optimal under differentiation and non-differentiation where S, R, and B are the order-up-to, reserve-up-to, and backlog-up-to amounts.

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