Template-Type: ReDIF-Paper 1.0
Author-Name: Ju, W.
Author-Name-Last: Ju
Author-Name-First: Wanrong
Author-Name: Gabor, A.F.
Author-Name-Last: Gabor
Author-Name-First: Adriana
Author-Name: van Ommeren, J.C.W.
Author-Name-Last: van Ommeren
Author-Name-First: Jan-Kees
Title: Approximate Order-up-to Policies for Inventory Systems with Binomial Yield
Abstract: This paper studies an inventory policy for a retailer who orders his products from a supplier whose deliveries only partially satisfy the quality require- ments. We model this situation by an infinite-horizon periodic-review model with binomial random yield and positive lead time. We propose an order- up-to policy based on approximating the inventory model with unreliable supplier by a model with a reliable supplier and suitably modified demand distribution. The performance of the order-up-to policy is verified by com- paring it with both the optimal policy and the safety stock policy proposed in Inderfurth & Vogelgesang (2013). Further, we extend our approximation to a dual-sourcing model with two suppliers: the first slow and unreliable, and the other fast and fully reliable. Compared to the dual-index order- up-to policy for the model with full information on the yield, the proposed approximation gives promising results.
Creation-Date: 2013-12-31
File-URL: https://repub.eur.nl/pub/50255/ERS-2013-017-LIS.pdf
File-Format: application/pdf
Series: RePEc:ems:eureri
Number: ERS-2013-017-LIS
Keywords: inventory, yield uncertainty, order-up-to policy
Handle: RePEc:ems:eureri:50255