Determining Inventory Replenishment Policy, Vehicle Type and Optimal Order Quantity in Critical Situation with Variable Lead Time

Abstract

In Iran Khodro Khorasan, inventory replenishment policy of some items is based on certain simple model (Wilson model). Sometimes because of some reasons, goods reception may not be achieved at the planned time. This state is called as critical situation because the production line is on the eve of stop. The purpose of this paper is to present different inventory replenishment policies in critical situation. For each policy, the cost function that includes cost of line stop, ordering cost, holding cost and transportation cost has been modeled and through its minimization, vehicle type and optimal order quantity have been determined. This model has been used numerically for two items of Iran Khodro Khorasan. Findings show that applying the proposed policy leads to saved cost compared to the current policy of Iran Khodro Khorasan.

Keywords

• : inventory control policy
• critical situation
• variable lead time
• transportation.