Volume 54, Number 5, September-October 2020
|Page(s)||1327 - 1346|
|Published online||26 June 2020|
A novel approach to safety stock management in an integrated supply chain with controllable lead time and ordering cost reduction using present value
Department of Mathematics, The Gandhigram Rural Institute – Deemed University, Gandhigram, Tamil Nadu, India
* Corresponding author: firstname.lastname@example.org
Accepted: 7 May 2019
This paper presents a novel approach to safety stock management and investigates the impact of lead time reduction within an integrated vendor–buyer supply chain framework using present value where lead time and ordering cost reductions act dependently. In particular, the cost of the safety stock is determined by adopting a logistic approximation to the standard normal cumulative distribution. The service level is formulated in relation to the dimension of the single shipment, to the average demand of the buyer and to the number of admissible stockouts. We first discuss the case where the lead time and ordering cost reductions with linear function, and then consider the logarithmic functional relationship. Numerical examples including the sensitivity analysis with some managerial insights of system parameters is provided to validate the results of the supply chain models. The main contribution of this paper is introducing various types of ordering cost reduction in Braglia et al. (Appl. Stoc. Mod. Bus. Ind. 32 (2016) 99–112) by handling a new approach.
Mathematics Subject Classification: 90B05
Key words: Safety stock management / integrated vendor–buyer supply chain / logistic approximation / ordering cost reductions / present value
© EDP Sciences, ROADEF, SMAI 2020
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