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On the economic application of airlift to product distribution and its impact on inventory levels

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  • Donald Gross
  • A. Soriano

Abstract

In many resupply situations, the decisionmaker has the option of “purchasing” faster replenishment leadtimes. For example, a premium may be paid for delivery by parcel post rather than slower but less expensive delivery by railway express. It may be economically advantageous to pay shipment premiums for faster leadtimes when considering the possible cost reductions in pipeline (on‐order) inventory and safety stock levels. This paper develops a decision rule which, for any given item, will indicate whether it is economically advantageous to purchase a faster leadtime. The general methodology is then applied to a peacetime military resupply operation involving several million items, each requiring a decision as to whether the item should be shipped by air or sea.

Suggested Citation

  • Donald Gross & A. Soriano, 1972. "On the economic application of airlift to product distribution and its impact on inventory levels," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 19(3), pages 501-507, September.
    • Handle: RePEc:wly:navlog:v:19:y:1972:i:3:p:501-507
    DOI: 10.1002/nav.3800190310
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    Cited by:

    1. Chi Chiang & Genaro J. Gutierrez, 1998. "Optimal control policies for a periodic review inventory system with emergency orders," Naval Research Logistics (NRL), John Wiley & Sons, vol. 45(2), pages 187-204, March.
    2. Svoboda, Josef & Minner, Stefan & Yao, Man, 2021. "Typology and literature review on multiple supplier inventory control models," European Journal of Operational Research, Elsevier, vol. 293(1), pages 1-23.

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