The learning effect on setup cost reduction for mixture inventory models with variable lead time

This paper investigates the impact of learning curve effect on setup cost for the continuous review inventory model involving controllable lead time with the mixture of backorder and partial lost sales. A learning curve is a well known tool which describes the relation between the performance of a task and the number of repetitions of that task. The objective of this study is to minimize the expected total annual cost by simultaneously optimizing order quantity, safety factor and lead time under different setup learning rates. There are two models considered in the paper, one with normal demand distribution and another with general demand distribution having both mean and variance known and finite. Numerical examples are presented to illustrate the procedures of the proposed solution algorithms, along with the savings on the total costs of the models with the inclusion of the learning effect on setup.