American Journal of Applied Sciences

Economic Ordering Quantity Model with Lead Time Reduction and Backorder Price Discount for Stochastic Demand

Ming-Cheng Lo

DOI : 10.3844/ajassp.2009.387.392

American Journal of Applied Sciences

Volume 6, Issue 3

Pages 387-392

Abstract

This study considered reorder point on the continuous review inventory model under controllable lead time with mixture of backorder price discounts and partial lost sales. We developed a continuous review inventory model where the lead time, the order quantity, backorder discount and safety factor were considered as the decision variables of a mixture of backorders and lost sales inventory model. The objective was to minimize the expected total annual cost with respect to related decision variables. The purpose model with lead time demand distribution was unknown. The author applies a minimax distribution free procedure to find the optimal solution and numerical example was included to illustrate the solution procedure of the proposed algorithms.

Copyright

© 2009 Ming-Cheng Lo. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.