TY - JOUR
T1 - Reserve stock models
T2 - Deterioration and preventive replenishment
AU - Maddah, Bacel
AU - Yassine, Ali A.
AU - Salameh, Moueen K.
AU - Chatila, Lama
PY - 2014/1/1
Y1 - 2014/1/1
N2 - Reserve stocks are needed in a wide spectrum of industries from strategic oil reserves to tactical (machine buffer) reserves in manufacturing. One important aspect under-looked in research is the effect of deterioration, where a reserve stock, held for a long time, may be depleted gradually due to factors such as spoilage, evaporation, and leakage. We consider the common framework of a reserve stock that is utilized only when a supply interruption occurs. Supply outage occurs randomly and infrequently, and its duration is random. During the down time the reserve is depleted by demand, diverted from its main supply. We develop optimal stocking policies, for a reserve stock which deteriorates exponentially. These policies balance typical economic costs of ordering, holding, and shortage, as well as additional costs of deterioration and preventive measures. Our main results are showing that (i) deterioration significantly increases cost (up to 5%) and (ii) a preventive replenishment policy, with periodic restocking, can offset some of these additional costs. One side contribution is refining a classical reserve stock model (Hansmann, 1962).
AB - Reserve stocks are needed in a wide spectrum of industries from strategic oil reserves to tactical (machine buffer) reserves in manufacturing. One important aspect under-looked in research is the effect of deterioration, where a reserve stock, held for a long time, may be depleted gradually due to factors such as spoilage, evaporation, and leakage. We consider the common framework of a reserve stock that is utilized only when a supply interruption occurs. Supply outage occurs randomly and infrequently, and its duration is random. During the down time the reserve is depleted by demand, diverted from its main supply. We develop optimal stocking policies, for a reserve stock which deteriorates exponentially. These policies balance typical economic costs of ordering, holding, and shortage, as well as additional costs of deterioration and preventive measures. Our main results are showing that (i) deterioration significantly increases cost (up to 5%) and (ii) a preventive replenishment policy, with periodic restocking, can offset some of these additional costs. One side contribution is refining a classical reserve stock model (Hansmann, 1962).
KW - Deterioration
KW - Inventory control
KW - Preventive replenishment
KW - Reserve stock
KW - Supply interruption
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U2 - 10.1016/j.ejor.2013.06.043
DO - 10.1016/j.ejor.2013.06.043
M3 - Article
AN - SCOPUS:84882873163
SN - 0377-2217
VL - 232
SP - 64
EP - 71
JO - European Journal of Operational Research
JF - European Journal of Operational Research
IS - 1
ER -