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Inventory Models with Fixed Costs, Forecast Updates, and Two Delivery Modes

Author

Listed:
  • Suresh P. Sethi

    (School of Management, University of Texas at Dallas, Richardson, Texas 75083-0688)

  • Houmin Yan

    (School of Management, University of Texas at Dallas, Richardson, Texas 75083-0688)

  • Hanqin Zhang

    (Institute of Applied Mathematics, Academia Sinica, Beijing, 100080, China)

Abstract

This paper is concerned with a periodic review inventory system with fast and slow delivery modes, fixed ordering cost, and regular demand forecast updates. At the beginning of each period, on-hand inventory and demand information are updated. At the same time, decisions on how much to order using fast and slow delivery modes are made. Fast and slow orders are delivered at the end of the current period and at the end of the next period, respectively. A forecast-update-dependent ( s , S )-type policy is shown to be optimal. Also shown are some monotonicity properties of the policy parameters with respect to the costs and information updates.

Suggested Citation

  • Suresh P. Sethi & Houmin Yan & Hanqin Zhang, 2003. "Inventory Models with Fixed Costs, Forecast Updates, and Two Delivery Modes," Operations Research, INFORMS, vol. 51(2), pages 321-328, April.
    • Handle: RePEc:inm:oropre:v:51:y:2003:i:2:p:321-328
    DOI: 10.1287/opre.51.2.321.12777
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    References listed on IDEAS

    as
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