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A (Q,R) inventory replenishment model with two delivery modes

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  • Pérez, Cinthia
  • Geunes, Joseph

Abstract

Although splitting shipments across multiple delivery modes typically increases total shipping costs as a result of diseconomies of scale, it may offer certain benefits that can more than offset these costs. These benefits include a reduction in the probability of stockout and in the average inventory costs. We consider a single-stage inventory replenishment model that includes two delivery modes: a cheaper, less reliable mode, and another, more expensive but perfectly reliable mode. The high-reliability mode is only utilized in replenishment intervals in which the lead time of the less-reliable mode exceeds a certain value. This permits substituting the high-reliability mode for safety stock, to some degree. We characterize optimal replenishment decisions with these two modes, as well as the potential benefits of simultaneously using two delivery modes.

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  • Pérez, Cinthia & Geunes, Joseph, 2014. "A (Q,R) inventory replenishment model with two delivery modes," European Journal of Operational Research, Elsevier, vol. 237(2), pages 528-545.
    • Handle: RePEc:eee:ejores:v:237:y:2014:i:2:p:528-545
    DOI: 10.1016/j.ejor.2014.02.049
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    Cited by:

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    2. Konur, Dinçer & Campbell, James F. & Monfared, Sepideh A., 2017. "Economic and environmental considerations in a stochastic inventory control model with order splitting under different delivery schedules among suppliers," Omega, Elsevier, vol. 71(C), pages 46-65.
    3. Engebrethsen, Erna & Dauzère-Pérès, Stéphane, 2019. "Transportation mode selection in inventory models: A literature review," European Journal of Operational Research, Elsevier, vol. 279(1), pages 1-25.
    4. Qiu, Ruozhen & Sun, Yue & Sun, Minghe, 2022. "A robust optimization approach for multi-product inventory management in a dual-channel warehouse under demand uncertainties," Omega, Elsevier, vol. 109(C).

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