A Distribution-Free Model with Variable Setup Cost, Backorder Price Discount and Controllable Lead Time
The purpose of this study is to investigate an inventory model for variable setup cost under stochastic conditions, in which the order quantity, reorder point, lead time and backorder price-discount rate are decision variables. The lead time demand is stochastic and exact distribution is unknown. Therefore, the distributionfree approach for the lead time demand with known mean and standard deviation is discussed. The proposed method is validated based on the numerical example and sensitivity analysis, and the results are compared with the existing studies in literature. The numerical results demonstrate that the proposed distribution free approach is more economical and saves significant cost.
Inventory management, Setup cost reduction, Stochastic condition, Controllable lead time, Distribution-free approach