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JEAM.,   Volume(4) - Issue(2), 2018
pp 34-48,   http://dx.doi.org/10.18831/djmaths.org/2018021004

An Inventory Model with Backorder Price Discount and Stochastic Lead Time

Sung Jun Kim;Biswajit Sarkar, Sumon Sarkar

Abstract

This study investigates an inventory model to reduce the manufacturing setup cost where order quantity, setup cost, reorder point, backorder price-discount rate, and lead time are decision variables. The model assumes a lead time dependent backorder rate, where the lead time demand is stochastic in nature, which follows a normal distribution. There is a proposition to obtain the optimal solutions for the model. Some numerical examples and sensitivity analysis are presented to illustrate the proposed model. The numerical results are compared with the existing results from literature, and indicating significant savings over the existing total cost.

Keywords

Setup cost reduction, Backorder price-discount, Stochastic lead time, Distribution free approach.

Received
27/03/2018
, Accepted
30/04/2018
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