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The Impact of Nonconforming Items on (s, S) Inventory Model with Customer Order Reservation and Cancellation

Takemoto, Yasuhiko    (Faculty of Management and Information Systems Prefectural University of Hiroshima   ); Arizono, Ikuo    (Division of Electrical Engineering and Information Science Graduate School of Engineering, Osaka Prefecture, University  );
  • 초록

    The ultimate goal of inventory management is to decide the timing and the quantity of ordering in response to uncertain demands. Recently, some researchers have focused upon an impact of distortions in the information, e.g., customer order cancellation, on an economical inventory policy. The customer order cancellation is considered a kind of distortions in demands, because a demand that is eventually cancelled is equivalent to a phony demand. Also, there are some additional distortions in the inventory information. For instance, the procurement of suppliers may include some nonconforming items as a result of imperfect production and inspection by the suppliers, and/or damage in transit. The nonconforming item should be considered a kind of distortions in the inventory information, because the nonconforming item is equivalent to a phony stock. In this article, we consider an inventory model under the situation that customers can cancel their orders and the procurement of suppliers may include some nonconforming items. Then, we introduce the customer order reservation into the inventory model for the purpose of avoiding the costly backlogs, because the customer order reservation gives retailers a period to fulfill customer's requests. We formulate a periodic review (s, S) inventory model and investigate the economical operation under the situation mentioned above. Further, through the sensitivity analysis, we show the impact of these distortions and the effect of the customer order reservation on the inventory policy.


  • 주제어

    Customer Order Cancellation .   Customer Order Reservation .   Inspection .   Nonconforming Items .   Periodic Review (s, S) Inventory Model.  

  • 참고문헌 (8)

    1. Cheung, K. L. and Zhang, A. X. (1999), The impact of inventory information distortion due to customer order cancellations, Naval Research Logistics, 46, 213-231 
    2. Gross, D. and Harris, C. M. (1985), Fundamentals of queueing theory, Wiley, New York 
    3. Wu, K. S. and Ouyang, L. Y. (2001), (Q, r, L) inventory model with defective items, Computers and Industrial Engineering, 39, 173-185 
    4. Yuan, X. M. and Cheung, K. L. (2003), Optimal inventory policy for systems with demand cancellation, IIE Transactions, 35, 739-747 
    5. Moinzadeh, K. and Lee, H. L. (1987), A continuous inventory model with constant resupply time and defective items, Naval Research Logistics, 34, 457-467 
    6. Taylor, H. M. and Karlin, S. (1998), An introduction to stochastic modeling (3rd edition), Academic Press, Orlando, FL 
    7. Khouja, M. (2003), The impact of quality consideration on material flow in two-stage inventory systems, International Journal of Production Research, 41, 1533-1547 
    8. Lee, H. L., Padmanabhan, P., and Whang, S. (1997), Information distortion in a supply chain: The bullwhip effect, Management Science, 43, 546-558 

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