This paper investigates the delay experienced by retailers in a distribution system due to shortages at the central warehouse. Simple formulae are developed to estimate the mean and variance of this delay. The formulae are based on replacing the stochastic lead-time demand with a stochastic...

We consider the problem of choosing the holding cost in inventory models. Traditionally, the cost of holding inventory is assumed to increase linearly with a rate that is equal to a percentage of the product value. This since the capital cost is believed to make up the main part of the cost....

This paper analyzes the multi-period base-stock problem where there is a financial risk associated with a stochastic demand. For the single-period problem, it is known that the optimal inventory policy can be obtained with the Black and Scholes option pricing formula. This paper pushes the...

The effect of financial risks on (R, Q) inventory policies is analyzed in a real options framework. Simple adjustments of the usual formulas for R and Q are suggested and tested. Stochastic demand and purchase costs are considered, both with known systematic (business-cycle-related) risk. The...

In this paper, we analyze expediting decisions in a continuous-time, continuous-stage serial supply chain facing a Poisson demand process. For each unit in the chain, one must decide at which speed it should be moved downstream, given the state of the system, so as to minimize total supply chain...

In this paper, we present a continuous model to optimize multi-echelon inventory management decisions under stochastic demand. Observing that in such continuous system it is never optimal to let orders cross, we decompose the general problem into a set of single-unit sub-problems that can be...