Study on the inventory system with ordering quantity depending on the supplier´s on statue

This paper analyzes a continuous-review inventory system with random supply interruptions and stochastic lead-time. A monopolistic supplier alternates between supplier´s ON and OFF periods. The variable (r, q)-policy is used q= (q₁, q₂, hellip, q_m). According to the policy, with a constant demand rate, when the inventory level drops to the reorder point r and the supplier is in her statue i, an order with quantity qi(1lesilesm)$ is placed. If an order placement occurs during a supplier OFF period and the supplier resumes on the statue i, the order with quantity is on hold and not processed until the supplier´s ON with beginning statue i starts. The order raises the inventory level to a target level q_i + r at the end of the lead-time. Furthermore, the lead-time may be interrupted by the supplier OFF. Using the continuous time Markov chain technology and the renewal theory, a long-run average cost function is obtained. According to this result, the performance evaluation is conducted with example.