Article ID: | iaor20108923 |
Volume: | 181 |
Issue: | 1 |
Start Page Number: | 603 |
End Page Number: | 640 |
Publication Date: | Dec 2010 |
Journal: | Annals of Operations Research |
Authors: | Bensoussan Alain, akanyildirim Metin, Moussawi-Haidar Lama |
Keywords: | supply & supply chains |
This paper analyzes a stochastic inventory problem with an order-time constraint that restricts the times at which a manufacturer places new orders to a supplier. This constraint stems from the limited upstream capacity in a supply chain, such as production capacity at a supplier or transportation capacity between a supplier and a manufacturer. Consideration of limited upstream capacity extends the classical inventory literature that unrealistically assumes infinite supplier/transporter capacity. But this consideration increases the complexity of the problem. We study the constraint under a Poisson demand process and allow for a fixed ordering cost. In presence of the constraint, we establish the optimality of an (