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Analysis of a Two-Echelon Inventory Model with Lost Sales and Stochastic Demand using Continuous-Time Markov chain
| Content Provider | Semantic Scholar |
|---|---|
| Author | Farahani, Iman Vasheghani Haji, Rasoul |
| Copyright Year | 2014 |
| Abstract | In this paper, we studied a two-echelon inventory system which consists of one supplier and one retailer. All installations follow base stock inventory management policy. The customers arrive at retailer according to Poisson distribution. The demand is satisfied when both supplier and retailer have positive on-hand inventory. Otherwise, the demand is lost. The lead time of supplier and the time needed to replenish orders of retailer are assumed to be exponentially distributed. The purpose of this study is to minimize the expected long-run total cost of the system per unit time. Total cost of the system includes holding costs of supplier and retailer, and the cost of lost sales. We modeled the problem using continuous-time Markov chain and provided an approximation of the steady-state joint probabilities of outstanding orders of retailer in the service of supplier and supplier's on-hand inventory. The optimal solutions, properties of the objective function as well as some numerical results are presented. In our numerical results, the maximum error of 2.85% was observed. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://ieomsociety.org/ieom2014/pdfs/436.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
