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Optimal Policies for the Inventory Problem with Negotiable Leadtime

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  • Yoichiro Fukuda

    (Planning Research Corporation, Los Angeles, California)

Abstract

In this paper we study the dynamic inventory problem in which amounts of stock ordered at unit prices c k and c k+1 (c k > c k+1 ) are delivered, respectively, k and k + 1 periods later. It is demonstrated that under suitable cost conditions, the optimal policies are similar to those of the dynamic inventory problem with a delivery lag of k + 1 periods, except for an additional constant stock level up to which it is desired to order at unit price c K . If we assume that ordering decisions are made in every other period, it is demonstrated that analogous results are obtainable for the case in which amounts of stock ordered at unit prices c k , c k+1 , and c k+2 (c k > c k+1 > c k+2 ) are delivered, respectively, k, k + 1, and k + 2 periods later.

Suggested Citation

  • Yoichiro Fukuda, 1964. "Optimal Policies for the Inventory Problem with Negotiable Leadtime," Management Science, INFORMS, vol. 10(4), pages 690-708, July.
    • Handle: RePEc:inm:ormnsc:v:10:y:1964:i:4:p:690-708
    DOI: 10.1287/mnsc.10.4.690
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