A partial backorder control for continuous review (r, Q) inventory system with poisson demand and constant lead time

Gad Rabinowitz, Abraham Mehrez, Chu Ching-Wu Chu, B. Eddy Patuwo

Research output: Contribution to journalArticlepeer-review

39 Scopus citations

Abstract

In this paper, we consider the partial backorder policy used in conjunction with the traditional stochastic (r, Q) inventory system. The partial backorder control is modeled using a control variable, b, which limits the maximum number of backorders allowed to be accumulated in any given cycle. In traditional inventory control policies, the unsatisfied demands are either completely backordered or completely lost. The new control variable b provides an alternative to dealing with shortages, which is different from the two extremes policies: the pure backorder policy (which corresponds to b=∞) and the lost sales policy (b=0). We obtain the expected annual cost of the model and give a procedure to compute the optimal parameters, r*, b* and Q*. Numerical examples which demonstrate the advantage of implementing the partial backorder policy are presented and the percentage of cost savings depends on the fill rate.

Original languageEnglish
Pages (from-to)689-700
JournalComputers and Operations Research
Volume22
Issue number7
DOIs
StatePublished - 1 Jan 1995

ASJC Scopus subject areas

  • Computer Science (all)
  • Modeling and Simulation
  • Management Science and Operations Research

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