Title
Using the inventory-theoretic framework to determine cost-minimizing supply strategies in a stochastic setting Using the inventory-theoretic framework to determine cost-minimizing supply strategies in a stochastic setting
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
Amsterdam ,
Source (journal)
International journal of production economics. - Amsterdam
Volume/pages
115(2008) :1 , p. 248-259
ISSN
0925-5273
ISI
000259436600025
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
In a stochastic supply link between a supplier and a receiver, a crucial component of the total logistics costs is formed by the costs of safety stock held by the receiver to protect against stockouts. The level of safety stock depends on, among other things, the statistical distribution of demand during lead time (DDLT). For practical reasons, DDLT is often assumed to be normally distributed. However, previous research has indicated that this assumption is often invalid in real-life situations and that it can have a significant impact on safety stocks or service levels. This paper first presents an extensive review of previous research on stochastic inventory models, with specific emphasis on the distributions used to model period demand, lead time and/or DDLT. The paper also discusses a real-life case study in which the total logistics costs are calculated for a number of different transport modes for a gamma demand-gamma lead time setting.
E-info
https://repository.uantwerpen.be/docman/iruaauth/372bd0/4b4fb2b0efb.pdf
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