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Two-echelon inventory model with service level constraint and controllable lead time sensitive to order quantity

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Abstract

The decision-making and optimization of two-echelon inventory coordination were analyzed with service level constraint and controllable lead time sensitive to order quantity. First, the basic model of this problem was established and based on relevant analysis, the original model could be transformed by minimax method. Then, the optimal order quantity and production quantity influenced by service level constraint were analyzed and the boundary of optimal order quantity and production quantity was given. According to this boundary, the effective method and tactics were put forward to solve the transformed model. In case analysis, the optimal expected total cost of two-echelon inventory can be obtained and it was analyzed how service level constraint and safety factor influence the optimal expected total cost of two-echelon inventory. The results show that the optimal expected total cost of two-echelon inventory is constrained by the higher constraint between service level constraint and safety factor.

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Authors and Affiliations

  1. School of Management and Economics, Beijing Institute of Technology, Beijing, 100081, China

    Guo Li  (李果)

  2. School of Economics and Management, Wuhan University, Wuhan, 430072, China

    Xu Guan  (关旭)

  3. School of Business Administration, Hunan University, Changsha, 410082, China

    Meng-qi Liu  (刘梦麒) & Mi-yuan Shan  (单汩源)

Authors
  1. Guo Li  (李果)
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  2. Xu Guan  (关旭)
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  3. Meng-qi Liu  (刘梦麒)
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  4. Mi-yuan Shan  (单汩源)
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Corresponding author

Correspondence to Meng-qi Liu  (刘梦麒).

Additional information

Foundation item: Project(71102174, 71372019) supported by the National Natural Science Foundation of China; Project(9123028) supported by the Beijing Natural Science Foundation of China; Project(20111101120019) supported by the Specialized Research Fund for Doctoral Program of Higher Education of China; Project(11JGC106) supported by the Beijing Philosophy & Social Science Foundation of China; Projects(NCET-10-0048, NCET-10-0043) supported by the Program for New Century Excellent Talents in University of China; Project(2010YC1307) supported by Excellent Young Teacher in Beijing Institute of Technology of China

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Li, G., Guan, X., Liu, Mq. et al. Two-echelon inventory model with service level constraint and controllable lead time sensitive to order quantity. J. Cent. South Univ. 20, 3324–3333 (2013). https://doi.org/10.1007/s11771-013-1856-5

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  • DOI: https://doi.org/10.1007/s11771-013-1856-5

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