INVENTORY MODEL (nQ, R, T) RANDOM SUPPLY, CONSTANT LEAD TIMES AND EXPONENTIAL BACK ORDER COSTS
Keywords:
Continuous lead times, Gamma distribution, normal distribution, quadratic backorder costs, Bessel functions and inventory costsAbstract
This paper derives the inventory costs for the model when the backorder costs are exponential, lead time is constant and supply is random. It derives firstly the inventory cost for fixed constant lead times and exponential backorder costs. The random supply cost is obtained by averaging the result over the states of supply. Demand during lead time is normal and supply is assumed to be a gamma variate It derives the expected backorder costs, the expected number of backorders at any point in time and the probability of a stockout.
