A (Q, R) inventory replenishment model with two delivery modes |
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Authors: | Cinthia Pé rez,Joseph Geunes |
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Affiliation: | Department of Industrial and Systems Engineering, University of Florida, Gainesville, FL 32611, United States |
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Abstract: | Although splitting shipments across multiple delivery modes typically increases total shipping costs as a result of diseconomies of scale, it may offer certain benefits that can more than offset these costs. These benefits include a reduction in the probability of stockout and in the average inventory costs. We consider a single-stage inventory replenishment model that includes two delivery modes: a cheaper, less reliable mode, and another, more expensive but perfectly reliable mode. The high-reliability mode is only utilized in replenishment intervals in which the lead time of the less-reliable mode exceeds a certain value. This permits substituting the high-reliability mode for safety stock, to some degree. We characterize optimal replenishment decisions with these two modes, as well as the potential benefits of simultaneously using two delivery modes. |
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Keywords: | Inventory planning and control Supply chain management Lead time management Inventory theory |
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