IDEAS home Printed from https://ideas.repec.org/a/spr/ijsaem/v8y2017i2d10.1007_s13198-017-0611-y.html
   My bibliography  Save this article

An inventory model with uncertain demand and lost sales reduction under service level constraint

Author

Listed:
  • S. Hemapriya

    (The Gandhigram Rural Institute - Deemed University)

  • R. Uthayakumar

    (The Gandhigram Rural Institute - Deemed University)

Abstract

In practice, the quantity received may not match with the quantity ordered, due to various reasons such as rejection during inspection, damage or breakage during transportation, human errors in counting etc. Subsequently, the managers often must make decisions under uncertain quantity received circumstances. This paper explores the feasibility of reducing ordering cost and lost sales caused by stock-out. In this study, we examine the continuous review inventory model with shortages include the case where the quantity received is uncertain in which the lead time and lost sales rate are decision variables and also with service level constraint. Here we consider the lead time crashing cost is a function of negative exponential lead time. The objective of this study is to minimize the joint expected total cost by simultaneously optimizing the order quantity and lost sales rate. An efficient algorithm for finding the optimal solution is developed and numerical examples are given to illustrate the results.

Suggested Citation

  • S. Hemapriya & R. Uthayakumar, 2017. "An inventory model with uncertain demand and lost sales reduction under service level constraint," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 8(2), pages 1399-1418, November.
    • Handle: RePEc:spr:ijsaem:v:8:y:2017:i:2:d:10.1007_s13198-017-0611-y
    DOI: 10.1007/s13198-017-0611-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13198-017-0611-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s13198-017-0611-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kun-Shan Wu & I-Chuan Lin, 2004. "Extend (r, Q) Inventory Model Under Lead Time and Ordering Cost Reductions When the Receiving Quantity is Different from the Ordered Quantity," Quality & Quantity: International Journal of Methodology, Springer, vol. 38(6), pages 771-786, December.
    2. Chang, Hung-Chi & Ouyang, Liang-Yuh & Wu, Kun-Shan & Ho, Chia-Huei, 2006. "Integrated vendor-buyer cooperative inventory models with controllable lead time and ordering cost reduction," European Journal of Operational Research, Elsevier, vol. 170(2), pages 481-495, April.
    3. Zhang, Tinglong & Liang, Liang & Yu, Yugang & Yu, Yan, 2007. "An integrated vendor-managed inventory model for a two-echelon system with order cost reduction," International Journal of Production Economics, Elsevier, vol. 109(1-2), pages 241-253, September.
    4. Evan L. Porteus, 1985. "Investing in Reduced Setups in the EOQ Model," Management Science, INFORMS, vol. 31(8), pages 998-1010, August.
    5. Chandrasekhar Das, 1976. "Approximate Solution to the (Q, r) Inventory Model for Gamma Lead Time Demand," Management Science, INFORMS, vol. 22(9), pages 1043-1047, May.
    6. Woo, York Y. & Hsu, Shu-Lu & Wu, Soushan, 2001. "An integrated inventory model for a single vendor and multiple buyers with ordering cost reduction," International Journal of Production Economics, Elsevier, vol. 73(3), pages 203-215, October.
    7. Hsu, Shu-Lu & Lee, Chun Chen, 2009. "Replenishment and lead time decisions in manufacturer-retailer chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 45(3), pages 398-408, May.
    8. Nughthoh Arfawi Kurdhi & Joko Prasetyo & Sri Sulistijowati Handajani, 2016. "An inventory model involving back-order price discount when the amount received is uncertain," International Journal of Systems Science, Taylor & Francis Journals, vol. 47(3), pages 662-671, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. M. Vijayashree & R. Uthayakumar, 2016. "Two-echelon supply chain inventory model with controllable lead time," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 7(1), pages 112-125, December.
    2. K. F. Mary Latha & M. Ganesh Kumar & R. Uthayakumar, 2021. "Two echelon economic lot sizing problems with geometric shipment policy backorder price discount and optimal investment to reduce ordering cost," OPSEARCH, Springer;Operational Research Society of India, vol. 58(4), pages 1133-1163, December.
    3. Huang, Chao-Kuei & Tsai, Deng-Maw & Wu, Ji-Cheng & Chung, Kun-Jen, 2010. "An optimal integrated vendor-buyer inventory policy under conditions of order-processing time reduction and permissible delay in payments," International Journal of Production Economics, Elsevier, vol. 128(1), pages 445-451, November.
    4. Glock, Christoph H., 2012. "The joint economic lot size problem: A review," International Journal of Production Economics, Elsevier, vol. 135(2), pages 671-686.
    5. Zhang, Tinglong & Liang, Liang & Yu, Yugang & Yu, Yan, 2007. "An integrated vendor-managed inventory model for a two-echelon system with order cost reduction," International Journal of Production Economics, Elsevier, vol. 109(1-2), pages 241-253, September.
    6. Taleizadeh, Ata Allah & Shokr, Iman & Konstantaras, Ioannis & VafaeiNejad, Mahyar, 2020. "Stock replenishment policies for a vendor-managed inventory in a retailing system," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).
    7. Monami Das Roy & Shib Sankar Sana, 2021. "Inter-dependent lead-time and ordering cost reduction strategy: a supply chain model with quality control, lead-time dependent backorder and price-sensitive stochastic demand," OPSEARCH, Springer;Operational Research Society of India, vol. 58(3), pages 690-710, September.
    8. S. Sarkar & B. C. Giri, 2020. "A vendor–buyer integrated inventory system with variable lead time and uncertain market demand," Operational Research, Springer, vol. 20(1), pages 491-515, March.
    9. Feng, Xuehao & Moon, Ilkyeong & Ryu, Kwangyeol, 2017. "Warehouse capacity sharing via transshipment for an integrated two-echelon supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 104(C), pages 17-35.
    10. Rad, Reza Hosseini & Razmi, Jafar & Sangari, Mohamad Sadegh & Ebrahimi, Zahra Fallah, 2014. "Optimizing an integrated vendor-managed inventory system for a single-vendor two-buyer supply chain with determining weighting factor for vendor׳s ordering cost," International Journal of Production Economics, Elsevier, vol. 153(C), pages 295-308.
    11. Yu, Yugang & Huang, George Q., 2010. "Nash game model for optimizing market strategies, configuration of platform products in a Vendor Managed Inventory (VMI) supply chain for a product family," European Journal of Operational Research, Elsevier, vol. 206(2), pages 361-373, October.
    12. Heydari, Jafar, 2014. "Lead time variation control using reliable shipment equipment: An incentive scheme for supply chain coordination," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 63(C), pages 44-58.
    13. Glock, Christoph H., 2012. "Lead time reduction strategies in a single-vendor–single-buyer integrated inventory model with lot size-dependent lead times and stochastic demand," International Journal of Production Economics, Elsevier, vol. 136(1), pages 37-44.
    14. Yu, Yugang & Chu, Feng & Chen, Haoxun, 2009. "A Stackelberg game and its improvement in a VMI system with a manufacturing vendor," European Journal of Operational Research, Elsevier, vol. 192(3), pages 929-948, February.
    15. Bernstein, Fernando & Gürhan Kök, A. & Meca, Ana, 2015. "Cooperation in assembly systems: The role of knowledge sharing networks," European Journal of Operational Research, Elsevier, vol. 240(1), pages 160-171.
    16. Li, Xiang, 2020. "Reducing channel costs by investing in smart supply chain technologies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
    17. Dhahri, Akrem & Gharbi, Ali & Ouhimmou, Mustapha, 2022. "Integrated production-delivery control policy for an unreliable manufacturing system and multiple retailers," International Journal of Production Economics, Elsevier, vol. 245(C).
    18. Haider Ali & Reshma Nasreen & Neetu Arneja & Chandra K. Jaggi, 2023. "Optimization of a periodically assessing model with manageable lead time under SLC with back order rebate for deteriorating items," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 14(1), pages 241-266, February.
    19. Jian, Ming & Fang, Xin & Jin, Liu-qian & Rajapov, Azamat, 2015. "The impact of lead time compression on demand forecasting risk and production cost: A newsvendor model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 84(C), pages 61-72.
    20. Almehdawe, Eman & Mantin, Benny, 2010. "Vendor managed inventory with a capacitated manufacturer and multiple retailers: Retailer versus manufacturer leadership," International Journal of Production Economics, Elsevier, vol. 128(1), pages 292-302, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:ijsaem:v:8:y:2017:i:2:d:10.1007_s13198-017-0611-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.