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Inventory management with variable lead-time dependent procurement cost **.
- Article from:
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Omega
- Article date:
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October 1, 2008
- Author:
- Chandra, Charu; Grabis, Janis
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Copyright informationCOPYRIGHT 2008 Adams Business Media. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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A reduction in the inventory replenishment lead-time allows reducing safety stock requirements and improving customer service. However, it might be accompanied by increased procurement costs because of premium charges imposed by suppliers, or higher transportation costs. This paper studies a single-stage variable lead-time inventory system with lead-time dependent procurement cost. Selection of the lead-time value represents finding the trade-off between benefits of lead-time reduction and increase in the procurement cost. A model for joint optimization of inventory and procurement costs is developed. Numerical studies are conducted to identify conditions under which lead-time reduction ...
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