Dynamic re-order point inventory control with lead-time uncertainty : analysis and empirical investigation

Babai, MZ; Syntetos, A; Dallery, Y; Nikolopoulos, K

Abstract

A new forecast-based dynamic inventory control approach is discussed in this paper. In this approach, forecasts and forecast uncertainties are assumed to be exogenous data known in advance at each period over a fixed horizon.
The control parameters are derived by using a sequential procedure. The merits of this approach as compared to the classical one are presented. We focus on a single-stage and single-item inventory system with non-stationary demand and
lead-time uncertainty. A dynamic re-order point control policy is analysed based on the new approach and its parameters are determined for a given target cycle
service level (CSL). The performance of this policy is assessed by means of empirical experimentation on a large demand data set from the pharmaceutical industry. The empirical results demonstrate the benefits arising from using such a policy and allow insights to be gained into other pertinent managerial issues.

Citation

Babai, M., Syntetos, A., Dallery, Y., & Nikolopoulos, K. (2009). Dynamic re-order point inventory control with lead-time uncertainty : analysis and empirical investigation. International Journal of Production Research, 47(9), 2461-2483. https://doi.org/10.1080/00207540701666824

• Journal Article Type: Article
• Publication Date: Jan 1, 2009
• Deposit Date: Oct 13, 2011
• Journal: International Journal of Production Research
• Print ISSN: 0020-7543
• Publisher: Taylor and Francis
• Peer Reviewed: Peer Reviewed
• Volume: 47
• Issue: 9
• Pages: 2461-2483
• DOI: https://doi.org/10.1080/00207540701666824
• Publisher URL: http://dx.doi.org/ 10.1080/00207540701666824
• Additional Information: Funders : Engineering and Physical Sciences Research Council (EPSRC); Projects : EPSRC: EP/D062942/1