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Inventory models with fixed and variable lead time crash costs considerations

Author

Listed:
  • J C-H Pan

    (National Taiwan University of Science and Technology)

  • Y-C Hsiao

    (Hwa Hsia College of Technology and Commerce)

  • C-J Lee

    (National Taiwan University of Science and Technology)

Abstract

Most of the literature pertaining to inventory problems assumes lead time to be a prescribed parameter and thus not subject to control. In many practical situations, inventory lead time can be shortened at the expense of additional cost. Hence, the variable lead time can be regarded as a decision variable since it can be decomposed into several components, each having a crash cost function for the respective reduced lead time. However, in the related research each such crash cost is often treated only as a function of the reduced lead time. In this paper, crash cost is represented as a function of both the order quantity and the reduced lead time. An inventory model with normal demand is first presented and another model with unknown demand distribution is also discussed. Numerical examples are included to illustrate the procedures of the algorithms. These examples also show that the crash priority changes as the demand changes.

Suggested Citation

  • J C-H Pan & Y-C Hsiao & C-J Lee, 2002. "Inventory models with fixed and variable lead time crash costs considerations," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 53(9), pages 1048-1053, September.
    • Handle: RePEc:pal:jorsoc:v:53:y:2002:i:9:d:10.1057_palgrave.jors.2601354
    DOI: 10.1057/palgrave.jors.2601354
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    Citations

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    Cited by:

    1. Hayya, Jack C. & Harrison, Terry P. & He, X. James, 2011. "The impact of stochastic lead time reduction on inventory cost under order crossover," European Journal of Operational Research, Elsevier, vol. 211(2), pages 274-281, June.
    2. 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.
    3. Chang, Ching-Ter, 2005. "A linearization approach for inventory models with variable lead time," International Journal of Production Economics, Elsevier, vol. 96(2), pages 263-272, May.
    4. Li, Yina & Xu, Xuejun & Zhao, Xiande & Yeung, Jeff Hoi Yan & Ye, Fei, 2012. "Supply chain coordination with controllable lead time and asymmetric information," European Journal of Operational Research, Elsevier, vol. 217(1), pages 108-119.
    5. 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.

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