An optimal replenishment policy for an EOQ model with partial backlogging

Sicilia, Joaquı́n; San-José, Luis A.; García-Laguna, Juan

doi:10.1007/s10479-008-0393-3

Cited by 15 publications

(7 citation statements)

References 14 publications

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“…Regarding the reason for the mixture of backorders and lost sales, they explain that 'a few customers may be impatient, while others may be willing to wait till the next arrival of stock (Vijayan and Kumaran 2008, 106). ' Sicilia, San-José, and García-Laguna (2009) research partial backlogging, the fraction of backlogged demand determined by the waiting time when out-of-stock occurs, and the length of time elapsed after out-of-stock occurs. Yang, Teng, and Chern (2010) examine the optimal lot size for deteriorating products, considering partial backlogging and the stock-dependent consumption rate.…”

Section: Literature Reviewmentioning

confidence: 99%

How does inventory pooling work when product availability influences customers’ purchasing decisions?

Kurata

2014

International Journal of Production Research

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Inventory pooling is a technique that is widely used to cope with supply chain uncertainty. Naturally, however, product availability at a given store also influences the customer's purchasing decisions. Hence, a centralised inventory system with a long delivery lead time carries the risk of losing sales to customers who are product-availability-conscious. Assuming a supply chain of a supplier and multiple retailers, we study how inventory pooling works when productavailability-conscious customers abandon a given purchase if the items are not available at a given store. Developing a model with two random variables, Poisson demand and Bernoulli customer response to out-of-stock, we explore who should stock products -a supplier, a retailer, or both -in the context of a product-availability effect on sales. We then propose decision processes by which a supply chain can find the best inventory system based on supply chain size, demand rate, and inventory costs for both supplier and retailer. We also discuss the coordination required between a retailer and a supplier that must synchronise an optimal inventory system.

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Section: Literature Reviewmentioning

confidence: 99%

How does inventory pooling work when product availability influences customers’ purchasing decisions?

Kurata

2014

International Journal of Production Research

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“…However, it is more challenging to quantify in case of partial and full backlogging cases. Oliver (1993) Silica et al (2009) have proposed various forms of shortage costs functions corresponding to different types of backlogging scenarios b(t). Dhalla (2008), in her thesis work evaluated shortage cost in dynamic environment, using a case study of Dell.…”

Section: Motivation For Researchmentioning

confidence: 99%

Integrating materials management with project management of complex projects

Dixit

Srivastava

Chaudhuri

2013

Journal of Advances in Management Research

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Purpose -This work aims at integrating materials management with project management in the context of manufacturing of complex products which require a variety of items. To achieve this, we propose two prioritization measures of items: material criticality (MC) at activity level and overall criticality (OC) at project level by incorporating project network characteristic through activity criticality (AC) values. Design/methodology/approach -The costs or penalties which determine criticality of items are hidden in nature and are difficult to measure and model mathematically. Hence, Fuzzy Inference System (FIS), which captures experts' tacit knowledge in the form of linguistic If-Then rules has been used. Findings -OC obtained can be used as a measure to prioritize items for procurement aligned with on-site build strategy and as a surrogate measure of shortage cost coefficient for inventory models. The analyses of output to observe the effect of AC on OC values of items, clearly demonstrate the novelty and importance of incorporating project network characteristics in materials management decision making. Originality/value -In this work, we are able to leverage managerial tacit knowledge derived through years of experience and convert it into a readily usable quantitative parameter OC for prioritization of items to be procured. For identifying the input parameters for OC, we brought in the new perspective of including project network characteristics to align materials and project management.

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“…Perhaps that may be why not many research papers use this shortage cost structure. Among other authors who have also used an affine structure in the backorder cost are Rosenberg (1979), Drake and Pentico (2010), San-José and García-Laguna (2009); San-José et al (2014, 2015, and Sicilia et al (2009Sicilia et al ( , 2012. Table 1 summarizes some characteristics of the previously cited papers.…”

Section: Introductionmentioning

confidence: 99%

Optimization of an inventory system with partial backlogging from a financial investment perspective

San-José

Sicilia

Pando

et al. 2021

Int Trans Operational Res

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In some real inventory systems, item sales can be adjusted to a stable demand rate along the inventory cycle. For instance, home appliances, electrical products, lounge furniture, home water supply, etc., are items with a stable demand rate. In this work, we analyze an inventory system for an item of this type, where the demand rate is constant. Shortages are allowed, and it is assumed that a fraction of demand during the stock-out period is backlogged. It is supposed that the shortage costs (backorder cost and lost sales cost) have an affine structure: a fixed cost plus a linear cost that depends on the period of time where shortages exist. In this paper, instead of the maximization of the profit per unit time, or the minimization of the average inventory cost per unit time, the objective is the maximization of the return on inventory investment, which is a quotient defined as the average profit divided by the average inventory cost. The optimal inventory policy is obtained in a closed form under this new perspective. Moreover, it is shown that the optimal policy that maximizes the return on inventory investment is, in general, different from the one that maximizes the profit per unit time. In addition, the new optimal perspective offers some advantages. The optimal inventory policy that maximizes the return on investment does not depend on the unit selling price. Therefore, the inventory manager does not need to change his/her inventory policy if this price changes. These advantages are not usually present when the objective is the maximization of the profit per unit time. Numerical examples are provided to illustrate the theoretical results developed in this work. A sensitivity analysis of the optimal policy with respect to the system input parameters is also developed.

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An optimal replenishment policy for an EOQ model with partial backlogging

Cited by 15 publications

References 14 publications

How does inventory pooling work when product availability influences customers’ purchasing decisions?

How does inventory pooling work when product availability influences customers’ purchasing decisions?

Integrating materials management with project management of complex projects

Optimization of an inventory system with partial backlogging from a financial investment perspective

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