Value of Information in a Fixed Order Quantity Inventory System

摘要

The paper investigates a special situation in inventory systems where a supplier,who produces on order in fixed production cycli, provides information about the status of the coming production run at specific moments. The retailer can use the information to get a better insight in the lead time process. The information may not only be used to obtain an accurate approximation of the lead time distribution, but it may also be used in the operational ordering decisions. It presents a fixed order s sub t, Q strategy with a set of reorder points s sub t, depending on the virtual lead time t, which follows from the information of the supplier. A Markov model, which analyzes a given (s sub t, Q)-strategy, is used to quantify the value of the information provided by the supplier. Some numerical examples show that the approach may lead to considerable cost savings compared to the traditional approach where only one single reorder point, based on a 2-moment approximation, is used.