A two-demand-class inventory system with lost-sales and backorders

Authors:
Yun Zhou;Xiaobo Zhao
Affiliations:
Department of Industrial Engineering, Tsinghua University, Beijing, 100084, China;Department of Industrial Engineering, Tsinghua University, Beijing, 100084, China
Venue:
Operations Research Letters
Year:
2010

Citing 10
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Abstract

A periodic review inventory system serves two demand classes with different priorities. Unsatisfied demands in the high-priority class are lost, whereas those in the low-priority class are backlogged. We formulate the problem as a dynamic programming model and characterize the structure of the optimal replenishment policy.