Policies utilizing tactical inventory for service-differentiated customers

Duran S., Liu T., Simchi-Levi D., Swann J. L.

OPERATIONS RESEARCH LETTERS, vol.36, no.2, pp.259-264, 2008 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 36 Issue: 2
  • Publication Date: 2008
  • Doi Number: 10.1016/j.orl.2007.05.013
  • Journal Name: OPERATIONS RESEARCH LETTERS
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus
  • Page Numbers: pp.259-264
  • Keywords: tactical inventory, service differentiation, two-class, DEMAND CLASSES, PRIORITY, SYSTEMS
  • Middle East Technical University Affiliated: Yes

Abstract

We consider a manufacturer serving two customer classes where one wants the item immediately and the second receives a discount to accept a delay. We show that an (S, R, B) base-stock policy is optimal under differentiation and non-differentiation where S, R, and B are the order-up-to, reserve-up-to, and backlog-up-to amounts. (C) 2007 Elsevier B.V. All rights reserved.