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Published:
Dec 12, 2019DOI:
10.4314/njt.v38i4.21Keywords:
Article Details
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Main Article Content
Determination of the optimal backorder level for a lot-size reorder point inventory system with backorder parameter
Abstract
This paper attempts to investigate the existence of an optimal backorder level that will minimize the expected total inventory cost of a regular (R, Q) lot-size reorder point system that is associated with backorder effect and establish the allowable backorder levels. To achieve this, the expected order cycle cost function of the lot-size reorder point system with backorder effect is optimized to determine the optimal backorder parameter. Numerical results presented showed that an optimal backorder level of 8 units exist where the expected order cycle cost is minimum with a value ₦19,036,000. Furthermore between the backorder level of 0 and 8 units, the order cycle cost decreases from ₦19,105,000 to ₦19,036,000. Thereby defining the range of the allowable backorder levels.
Keywords: Backordered Level, Backorder Effect, Cycle Stock, Stock-Out and Backordered Demand
