Article ID: | iaor20122079 |
Volume: | 219 |
Issue: | 2 |
Start Page Number: | 312 |
End Page Number: | 323 |
Publication Date: | Jun 2012 |
Journal: | European Journal of Operational Research |
Authors: | Zhao Xiaobo, Chen Junlin, Zhou Yun |
Keywords: | simulation: applications, optimization, numerical analysis |
We consider a periodic‐review inventory system with two suppliers: an unreliable regular supplier that may be disrupted for a random duration, and a reliable backup supplier that can be used during a disruption. The backup supplier charges higher unit purchasing cost and fixed order cost when compared to the regular supplier. Because the backup supplier is used at unplanned moments, its capacity to replenish inventory is considered limited. Analytical results partially characterize the structure of the optimal order policy: a state‐dependent (