Title: Stochastic (Q, r) inventory model with customer reneging
Abstract: This paper presents a stochastic inventory model for situations in which, during a stockout period, unsatisfied demands are initially backordered but may renege (leave) probabilistically at the rate ρ to be filled elsewhere. The model is suggested by the customers' different reactions to a stockout condition: some patient customers wait until their demand is satisfied, while other impatient or urgent customers cannot wait long and have to fill their demand from another source. The cost of a backorder is assumed to be proportional to the length of time for which the backorder exists, and a fixed penalty cost is incurred per unit of lost demand. Based on a heuristic treatment of a lot-size reorder-point policy, a mathematical model representing the average annual cost of operating the inventory system is developed. The optimal operating policy variables minimizing the average annual cost can be calculated iteratively. At the extremes when ρ = 0 and ρ = ξ, the model presented reduces to the usual backorders and lost sales case, respectively.
Publication Year: 1989
Publication Date: 1989-01-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 1
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