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On the benefits of delayed ordering

Syntetos, A. A., Teunter, R. H., Babai, M. Z. and Transchel, S. 2016. On the benefits of delayed ordering. European Journal of Operational Research 248 (3) , pp. 963-970. 10.1016/j.ejor.2015.08.003

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Practical experience and scientific research show that there is scope for improving the performance of inventory control systems by delaying a replenishment order that is otherwise triggered by generalised and all too often inappropriate assumptions. This paper presents the first analysis of the most commonly used continuous (s, S) policies with delayed ordering for inventory systems with compound demand. We analyse policies with a constant delay for all orders as well as more flexible policies where the delay depends on the order size. For both classes of policies and general demand processes, we derive optimality conditions for the corresponding delays. In a numerical study with Erlang distributed customer inter-arrival times, we compare the cost performance of the optimal policies with no delay, a constant delay and flexible delays. Sensitivity results provide insights into when the benefit of delaying orders is most pronounced, and when applying flexible delays is essential.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Centre for Advanced Manufacturing Systems At Cardiff (CAMSAC)
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HF Commerce
Additional Information: Inventory control; Delayed ordering; Intermittent demand; (s, S) policy; Marginal cost analysis
Publisher: Elsevier
ISSN: 0377-2217
Date of Acceptance: 5 August 2015
Last Modified: 02 Feb 2021 17:15

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