Inventory commitment and prioritized backlogging clearance with alternative delivery lead times

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review

4 Scopus Citations
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Detail(s)

Original languageEnglish
Pages (from-to)1227-1242
Journal / PublicationProduction and Operations Management
Volume23
Issue number7
Early online date30 Aug 2013
Publication statusPublished - Jul 2014

Abstract

We propose a model where customers are classified into two groups: short lead-time customers who require the product immediately and long lead-time customers to whom the supplier may deliver either immediately or in the next cycle. Unmet orders are backlogged with associated costs. Specifically, the supplier faces two problems: how the on-hand inventories should be allocated between the two classes of customers and how the backlogged orders should be cleared when replenishments arrive. We treat the former as an inventory commitment problem and handle the latter with priority rules. We characterize and compare the inventory commitment policies with three priority rules in clearing backlogs. We also explore the optimal inventory replenishment decision and evaluate the performance of each priority rule. © 2013 Production and Operations Management Society.

Research Area(s)

  • backlog models, flexible delivery, inventory management, priority rules