Simple solution procedures for a class of two-echelon inventory problems
Operations Research
Proceedings of the Winter Simulation Conference
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In this study, we consider an inventory system with a modified (R, Q) ordering policy and stochastic lead time for a single product with continuous decaying. Each customer demands only one unit of the product and the system faces independent Poisson demand. An order with size of Q(1+α) is ordered immediately after the inventory position reaches R. Each order is considered to be as a separate package. Shortage is allowed and completely backordered. The objective is to minimize the long-run total expected cost. At first step, the mathematical model is developed for deterministic lead time. Since stochastic lead time leads to extremely complex model we apply simulation modeling approach. Then we validate the simulation model by comparing the outputs of simulation model with the mathematical model in the case of deterministic lead time. Finally, a number of numerical examples are optimized by applying the optimizer module of the applied software.