IDEAS home Printed from https://ideas.repec.org/a/wly/navres/v38y1991i1p107-121.html
   My bibliography  Save this article

Future supply uncertainty in EOQ models

Author

Listed:
  • Mahmut Parlar
  • Defne Berkin

Abstract

This article deals with an inventory problem where the supply is available only during an interval of (random) length X. The unavailability of supply lasts for a random duration Y. Using concepts from renewal theory, we construct an objective function (average cost/time) in terms of the order‐quantity decision variable Q. We develop the individual cost components as order, holding, and shortage costs after introducing two important random variables. Due to the complexity of the objective function when X and Y are general random variables, we discuss two special cases and provide numerical examples with sensitivity analysis on the cost and noncost parameters. The article concludes with a discussion of the comparison of the current model with random yield and random lead‐time models. Suggestions for further research are also provided.

Suggested Citation

  • Mahmut Parlar & Defne Berkin, 1991. "Future supply uncertainty in EOQ models," Naval Research Logistics (NRL), John Wiley & Sons, vol. 38(1), pages 107-121, February.
    • Handle: RePEc:wly:navres:v:38:y:1991:i:1:p:107-121
    DOI: 10.1002/1520-6750(199102)38:13.0.CO;2-4
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/1520-6750(199102)38:13.0.CO;2-4
    Download Restriction: no
    File URL: https://libkey.io/10.1002/1520-6750(199102)38:13.0.CO;2-4?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
    ---><---

    References listed on IDEAS

    as
    1. Hung-Po Chao, 1987. "Inventory Policy in the Presence of Market Disruptions," Operations Research, INFORMS, vol. 35(2), pages 274-281, April.
    2. Robert R. Meyer & Michael H. Rothkopf & Stephen A. Smith, 1979. "Reliability and Inventory in a Production-Storage System," Management Science, INFORMS, vol. 25(8), pages 799-807, August.
    3. 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.
    4. Mordechai Henig & Yigal Gerchak, 1990. "The Structure of Periodic Review Policies in the Presence of Random Yield," Operations Research, INFORMS, vol. 38(4), pages 634-643, August.
    5. Chandrasekhar Das, 1976. "Explicit formulas for the order size and reorder point in certain inventory problems," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 23(1), pages 25-30, March.
    6. Edward A. Silver, 1981. "Operations Research in Inventory Management: A Review and Critique," Operations Research, INFORMS, vol. 29(4), pages 628-645, August.
    7. Donald Erlenkotter & Suresh Sethi & Norio Okada, 1989. "Planning for Surprise: Water Resources Development Under Demand and Supply Uncertainty I. The General Model," Management Science, INFORMS, vol. 35(2), pages 149-163, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kosuke Kawakami & Hirokazu Kobayashi & Kazuhide Nakata, 2021. "Seasonal Inventory Management Model for Raw Materials in Steel Industry," Interfaces, INFORMS, vol. 51(4), pages 312-324, July.
    2. Saeed Poormoaied & Ece Zeliha Demirci, 2021. "Analysis of an inventory system with emergency ordering option at the time of supply disruption," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 43(4), pages 1007-1045, December.
    3. Mahmut Parlar & David Perry, 1996. "Inventory models of future supply uncertainty with single and multiple suppliers," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(2), pages 191-210, March.
    4. Nader Azad & Elkafi Hassini, 2019. "A Benders Decomposition Method for Designing Reliable Supply Chain Networks Accounting for Multimitigation Strategies and Demand Losses," Transportation Science, INFORMS, vol. 53(5), pages 1287-1312, September.
    5. Taleizadeh, Ata Allah & Tafakkori, Keivan & Thaichon, Park, 2021. "Resilience toward supply disruptions: A stochastic inventory control model with partial backordering under the base stock policy," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    6. Md. Tariqul Islam & Abdullahil Azeem & Masum Jabir & Ananna Paul & Sanjoy Kumar Paul, 2022. "An inventory model for a three-stage supply chain with random capacities considering disruptions and supplier reliability," Annals of Operations Research, Springer, vol. 315(2), pages 1703-1728, August.
    7. Asli Sencer Erdem & Mehmet Murat Fadilog̃lu & Süleyman Özekici, 2006. "An EOQ model with multiple suppliers and random capacity," Naval Research Logistics (NRL), John Wiley & Sons, vol. 53(1), pages 101-114, February.
    8. Mahmut Parlar, 2000. "Probabilistic Analysis of Renewal Cycles: An Application to a Non-Markovian Inventory Problem with Multiple Objectives," Operations Research, INFORMS, vol. 48(2), pages 243-255, April.
    9. Yimin Wang & Brian Tomlin, 2009. "To wait or not to wait: Optimal ordering under lead time uncertainty and forecast updating," Naval Research Logistics (NRL), John Wiley & Sons, vol. 56(8), pages 766-779, December.
    10. Antonio Arreola‐Risa & Gregory A. DeCroix, 1998. "Inventory management under random supply disruptions and partial backorders," Naval Research Logistics (NRL), John Wiley & Sons, vol. 45(7), pages 687-703, October.
    11. Brian M. Lewis & Alan L. Erera & Maciek A. Nowak & White Chelsea C., 2013. "Managing Inventory in Global Supply Chains Facing Port-of-Entry Disruption Risks," Transportation Science, INFORMS, vol. 47(2), pages 162-180, May.
    12. Emre Berk & Antonio Arreola‐Risa, 1994. "Note on “future supply uncertainty in EOQ models”," Naval Research Logistics (NRL), John Wiley & Sons, vol. 41(1), pages 129-132, February.
    13. Sevgen, Arya & Sargut, F. Zeynep, 2019. "May reorder point help under disruptions?," International Journal of Production Economics, Elsevier, vol. 209(C), pages 61-69.
    14. Sanjoy Kumar Paul & Ruhul Sarker & Daryl Essam, 2018. "A reactive mitigation approach for managing supply disruption in a three-tier supply chain," Journal of Intelligent Manufacturing, Springer, vol. 29(7), pages 1581-1597, October.
    15. Luangkesorn, K.L. & Klein, G. & Bidanda, B., 2016. "Analysis of production systems with potential for severe disruptions," International Journal of Production Economics, Elsevier, vol. 171(P4), pages 478-486.
    16. Nader Azad & Georgios Saharidis & Hamid Davoudpour & Hooman Malekly & Seyed Yektamaram, 2013. "Strategies for protecting supply chain networks against facility and transportation disruptions: an improved Benders decomposition approach," Annals of Operations Research, Springer, vol. 210(1), pages 125-163, November.
    17. Konstantaras, I. & Skouri, K. & Lagodimos, A.G., 2019. "EOQ with independent endogenous supply disruptions," Omega, Elsevier, vol. 83(C), pages 96-106.
    18. Gregory A. DeCroix, 2013. "Inventory Management for an Assembly System Subject to Supply Disruptions," Management Science, INFORMS, vol. 59(9), pages 2079-2092, September.
    19. Yingjie Fan & Frank Schwartz & Stefan Voß & David L. Woodruff, 2017. "Stochastic programming for flexible global supply chain planning," Flexible Services and Manufacturing Journal, Springer, vol. 29(3), pages 601-633, December.
    20. Bengisu Urlu & Nesim K. Erkip, 2020. "Safety stock placement for serial systems under supply process uncertainty," Flexible Services and Manufacturing Journal, Springer, vol. 32(2), pages 395-424, June.
    21. Lian Qi & Zuo‐Jun Max Shen, 2007. "A supply chain design model with unreliable supply," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(8), pages 829-844, December.

    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. Parlar, Mahmut & Perry, David, 1995. "Analysis of a (Q, r, T) inventory policy with deterministic and random yields when future supply is uncertain," European Journal of Operational Research, Elsevier, vol. 84(2), pages 431-443, July.
    2. Mahmut Parlar & David Perry, 1996. "Inventory models of future supply uncertainty with single and multiple suppliers," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(2), pages 191-210, March.
    3. Snyder, Lawrence V., 2014. "A tight approximation for an EOQ model with supply disruptions," International Journal of Production Economics, Elsevier, vol. 155(C), pages 91-108.
    4. Antonio Arreola‐Risa & Gregory A. DeCroix, 1998. "Inventory management under random supply disruptions and partial backorders," Naval Research Logistics (NRL), John Wiley & Sons, vol. 45(7), pages 687-703, October.
    5. Amílcar Oliveira & Teresa Oliveira & Antonio Seijas-Macías, 2018. "The uniform distribution product: an approach to the inventory model using R," Journal of Applied Statistics, Taylor & Francis Journals, vol. 45(2), pages 284-297, January.
    6. Yan, Xiaoming & Zhang, Minghui & Liu, Ke, 2010. "A note on coordination in decentralized assembly systems with uncertain component yields," European Journal of Operational Research, Elsevier, vol. 205(2), pages 469-478, September.
    7. Voelkel, Michael A. & Sachs, Anna-Lena & Thonemann, Ulrich W., 2020. "An aggregation-based approximate dynamic programming approach for the periodic review model with random yield," European Journal of Operational Research, Elsevier, vol. 281(2), pages 286-298.
    8. Hariga, Moncer & Ben-Daya, Mohamed, 1999. "Some stochastic inventory models with deterministic variable lead time," European Journal of Operational Research, Elsevier, vol. 113(1), pages 42-51, February.
    9. Hsieh, Chung-Chi & Lai, Hsing-Hua, 2017. "Capacity allocation with differentiated product demands under dual sourcing," International Journal of Production Economics, Elsevier, vol. 193(C), pages 757-769.
    10. Schmid, Verena & Doerner, Karl F. & Laporte, Gilbert, 2013. "Rich routing problems arising in supply chain management," European Journal of Operational Research, Elsevier, vol. 224(3), pages 435-448.
    11. Song, Yuyue & Wang, Yunzeng, 2017. "Periodic review inventory systems with fixed order cost and uniform random yield," European Journal of Operational Research, Elsevier, vol. 257(1), pages 106-117.
    12. Alain Bensoussan & Benoit Chevalier-Roignant & Alejandro Rivera, 2022. "A model for wind farm management with option interactions," Post-Print hal-04325553, HAL.
    13. Kutzner, Sarah C. & Kiesmüller, Gudrun P., 2013. "Optimal control of an inventory-production system with state-dependent random yield," European Journal of Operational Research, Elsevier, vol. 227(3), pages 444-452.
    14. Saurabh Bansal & Mahesh Nagarajan, 2017. "Product Portfolio Management with Production Flexibility in Agribusiness," Operations Research, INFORMS, vol. 65(4), pages 914-930, August.
    15. B. Khoury, 2009. "A discrete approach to designing optimal hedging-point control policies for production-inventory systems with general stochastic behavior," Computational Management Science, Springer, vol. 6(4), pages 399-409, October.
    16. Visentin, Andrea & Prestwich, Steven & Rossi, Roberto & Tarim, S. Armagan, 2021. "Computing optimal (R,s,S) policy parameters by a hybrid of branch-and-bound and stochastic dynamic programming," European Journal of Operational Research, Elsevier, vol. 294(1), pages 91-99.
    17. Strijbosch, L.W.G. & Heuts, R.M.J., 1994. "Investigating several alternatives for estimating the lead time demand distribution in a continuous review inventory model," Other publications TiSEM dc1f886c-0122-4da9-9598-8, Tilburg University, School of Economics and Management.
    18. Gullu, Refik, 1998. "Base stock policies for production/inventory problems with uncertain capacity levels," European Journal of Operational Research, Elsevier, vol. 105(1), pages 43-51, February.
    19. Woonghee Tim Huh & Mahesh Nagarajan, 2010. "Technical note ---Linear Inflation Rules for the Random Yield Problem: Analysis and Computations," Operations Research, INFORMS, vol. 58(1), pages 244-251, February.
    20. Chien, Chen-Fu & Wu, Cheng-Hung & Chiang, Yu-Shian, 2012. "Coordinated capacity migration and expansion planning for semiconductor manufacturing under demand uncertainties," International Journal of Production Economics, Elsevier, vol. 135(2), pages 860-869.

    More about this item

    Statistics

    Access and download statistics

    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:wly:navres:v:38:y:1991:i:1:p:107-121. 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: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1520-6750 .

    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.