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An optimal ordering policy for situations with uncertainty in supply

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  • Sujit K. Basu

Abstract

A one‐period inventory model where supply is a random variable with mean proportional to the quantity ordered has been considered. Under new better than used in expectation assumption on the supply variable, a strategy which maximizes a minimum profit has been suggested. An estimate for this maximin order quantity whenever the (customer) demand distribution is unknown has been proposed and almost sure convergence of this estimate to its true value with increasing sample size has been established.

Suggested Citation

  • Sujit K. Basu, 1987. "An optimal ordering policy for situations with uncertainty in supply," Naval Research Logistics (NRL), John Wiley & Sons, vol. 34(2), pages 151-159, April.
    • Handle: RePEc:wly:navres:v:34:y:1987:i:2:p:151-159
    DOI: 10.1002/1520-6750(198704)34:23.0.CO;2-G
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    Cited by:

    1. Qing Li & Shaohui Zheng, 2006. "Joint Inventory Replenishment and Pricing Control for Systems with Uncertain Yield and Demand," Operations Research, INFORMS, vol. 54(4), pages 696-705, August.
    2. Xu, He, 2010. "Managing production and procurement through option contracts in supply chains with random yield," International Journal of Production Economics, Elsevier, vol. 126(2), pages 306-313, August.
    3. Wu, Meng & Zhu, Stuart X. & Teunter, Ruud H., 2013. "The risk-averse newsvendor problem with random capacity," European Journal of Operational Research, Elsevier, vol. 231(2), pages 328-336.

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