Periodic-Review Inventory Model with Three Consecutive Delivery Modes and Forecast Updates
Journal of Optimization Theory and Applications, Vol. 124, No. 1, pp. 137-155, January 2005
19 Pages Posted: 9 Apr 2008 Last revised: 26 Apr 2014
This paper is concerned with a periodic-review inventory system with three consecutive delivery modes (fast, medium, and slow) and demand forecast updates. At the beginning of each period, the inventory level and demand information are updated and decisions on how much to order using each of the three delivery modes are made. It is shown that there is a base-stock policy for fast and medium modes which is optimal. Furthermore, the optimal policy for the slow mode may not be a base-stock policy in general.
Keywords: Inventory management, multiple delivery modes, forecast updates, base-stock policy, dynamic programming
JEL Classification: M11, C61, D83, M20
Suggested Citation: Suggested Citation