Analysis of a deterministic demand production/inventory system under nonstationary supply uncertainty


Gullu R., Onol E., Erkip N.

IIE TRANSACTIONS, vol.29, no.8, pp.703-709, 1997 (Peer-Reviewed Journal) identifier identifier

  • Publication Type: Article / Article
  • Volume: 29 Issue: 8
  • Publication Date: 1997
  • Doi Number: 10.1080/07408179708966380
  • Journal Name: IIE TRANSACTIONS
  • Journal Indexes: Science Citation Index Expanded, Scopus
  • Page Numbers: pp.703-709

Abstract

In this article we investigate a periodic review inventory model under deterministic dynamic demand and supply unavailability. In a given period, supply is either available or completely unavailable with given probabilities. Supply unavailability probabilities are nonstationary over time. We show the optimality of an order-up-to level policy, and obtain a newsboy-like formula that determines the optimal order-up-to levels. Our formula would provide guidence as to the appropriate amount of inventory to stock in the face of uncertainties in the supply process.