Sensitivity of continuous review stochastic (s,S) inventory systems to ordering delays |
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| Institution: | 1. Department of Management Science and Technology, Athens University of Economics and Business, Greece;2. Department of Mathematics, National and Kapodistrian University of Athens, Greece;1. School of Marine Electrical Engineering, Dalian Maritime University, Dalian, Liaoning 116026, PR China;2. College of Information Science and Engineering, Northeastern University, Shenyang 110819, China;3. Department of Electrical and Computer Engineering, University of Detroit Mercy, Detroit, MI 48221-3038, USA;4. College of Navigation, Dalian Maritime University, Dalian, Liaoning 116026, PR China;1. Department of Administrative Management, Business School, Jinan University, Guangzhou, 510632, China;2. School of Business, Saint Mary’s University, Nova Scotia B3H 3C3, Canada |
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| Abstract: | This paper examines continuous review stochastic (s, S) inventory systems with ordering delays. That is, systems where the difference between the time the order should be placed and the time the order is actually placed is non-trivial. The traditional inventory ordering, holding and penalty costs are included and the average cost for an (s, S) policy is developed and examined. Computational results are presented for two cases. In the first case, the manager is aware of the delay and uses the policy that minimizes all costs. We present the increase in cost due to having a delay. In the second case the manager is unaware of the delay and uses the (integer) square root formula. We present the increase in cost due to using the square root formula when it is inappropriate and in fact our computational results indicate that there may very well be a large increase in cost due to being unaware of the ordering delay. |
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