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- Title
Optimal Base-Stock Inventory-Management Policies of Cement Retailers under Supply-Side Disruptions.
- Authors
Debnath, Manik; Mazumder, Sanat Kr.; Hossain, Md Billal; Garai, Arindam; Illes, Csaba Balint
- Abstract
The current study aims to identify some optimal base-stock inventory-management policies that maximize the expected long-run profitability of cement retailers under potential supply-side disruptions. Unlike existing articles, the proposed economic order-quantity model considers periodically varying random demand rates of deteriorating items together with partially back-ordered shortages in the face of those random disruptions. This study computes the global concavity to execute the exemplary aspect for the optimal base-stock level under a slew of cost components and a fixed cycle length. Regarding the optimal pricing-related policies, this study proposes that cement retailers should stock from nearby supplier points. Unlike existing articles, we find that changes to either the unit-holding cost or the unit-lost sales cost have hardly any determining effect on the long-run profitability of retailers. When supply-side disruptions are more likely to occur during peak seasons, this study advocates for a planned capacity addition and higher base-stock levels of cement bags.
- Subjects
BACK orders; ECONOMIC models; RETAIL industry; OVERHEAD costs
- Publication
Mathematics (2227-7390), 2023, Vol 11, Issue 18, p3971
- ISSN
2227-7390
- Publication type
Article
- DOI
10.3390/math11183971