This paper studies two models based on the distribution of lead time demand. The first model assumes a normally distributed lead time demand and the second assumes that there is no specific distribution for lead time demand, but it is with known mean and standard deviation. The continuous-review inventory model is used for both cases. Transportation cost is dependent on the ordered quantity $i.e$., how much quantity buyer orders for delivery, based on that, a transportation discount is used to reduce the total cost. Service level constraint is included in this model to avoid backorder cost. Two efficient lemmas are established to obtain the optimum solution of the model. The expected value of additional information (EVAI) is calculated to show the excess amount needed for the distribution free case. Some numerical examples and sensitivity analysis are given to illustrate the model.

Accepted:

DOI: 10.1051/ro/2015055

Keywords: Controllable lead time, service level constraint, lead time crashing cost, transportation discounts, distribution free approach

^{1}; Guchhait, Rekha

^{2}; Sarkar, Biswajit

^{1}; Mittal, Mandeep

^{1, 3}

@article{RO_2016__50_4-5_921_0, author = {Shin, Dongmin and Guchhait, Rekha and Sarkar, Biswajit and Mittal, Mandeep}, title = {Controllable lead time, service level constraint, and transportation discounts in a continuous review inventory model}, journal = {RAIRO - Operations Research - Recherche Op\'erationnelle}, pages = {921--934}, publisher = {EDP-Sciences}, volume = {50}, number = {4-5}, year = {2016}, doi = {10.1051/ro/2015055}, mrnumber = {3570539}, zbl = {1353.90019}, language = {en}, url = {http://www.numdam.org/articles/10.1051/ro/2015055/} }

TY - JOUR AU - Shin, Dongmin AU - Guchhait, Rekha AU - Sarkar, Biswajit AU - Mittal, Mandeep TI - Controllable lead time, service level constraint, and transportation discounts in a continuous review inventory model JO - RAIRO - Operations Research - Recherche Opérationnelle PY - 2016 SP - 921 EP - 934 VL - 50 IS - 4-5 PB - EDP-Sciences UR - http://www.numdam.org/articles/10.1051/ro/2015055/ DO - 10.1051/ro/2015055 LA - en ID - RO_2016__50_4-5_921_0 ER -

%0 Journal Article %A Shin, Dongmin %A Guchhait, Rekha %A Sarkar, Biswajit %A Mittal, Mandeep %T Controllable lead time, service level constraint, and transportation discounts in a continuous review inventory model %J RAIRO - Operations Research - Recherche Opérationnelle %D 2016 %P 921-934 %V 50 %N 4-5 %I EDP-Sciences %U http://www.numdam.org/articles/10.1051/ro/2015055/ %R 10.1051/ro/2015055 %G en %F RO_2016__50_4-5_921_0

Shin, Dongmin; Guchhait, Rekha; Sarkar, Biswajit; Mittal, Mandeep. Controllable lead time, service level constraint, and transportation discounts in a continuous review inventory model. RAIRO - Operations Research - Recherche Opérationnelle, Volume 50 (2016) no. 4-5, pp. 921-934. doi : 10.1051/ro/2015055. http://www.numdam.org/articles/10.1051/ro/2015055/

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