Optimal inventory policy involving ordering cost reduction, back-order discounts, and variable lead time demand by minimax criterion (Q1036496): Difference between revisions

Summary: This paper allows the backorder rate as a control variable to widen applications of a continuous review inventory model. Moreover, we also consider the backorder rate that is proposed by combining \textit{L.-Y. Ouyang} and \textit{B.-R. Chuang} [Mixture inventory model involving variable lead time and controllable backorder rate,' Comput. Ind. Eng. 40, No. 4, 339--348 (2001; \url{doi:10.1016/S0360-8352(01)00033-X})] (or \textit{W.-Ch. Lee} [Appl. Math. Comput. 160, No. 3, 701--717 (2005; Zbl 1087.90009)]) with \textit{J. C. Pan} and \textit{Y. C. Hsiao} [Int. J. Syst. Sci. 32, No. 7, 925--929 (2001; Zbl 1005.90007)] to present a new form. Thus, the backorder rate is dependent on the amount of shortages and backorder price discounts. Besides, we also treat the ordering cost as a decision variable. Hence, we develop an algorithmic procedure to find the optimal inventory policy by minimax criterion. Finally, a numerical example is also given to illustrate the results.