Dual Sourcing Inventory Systems: On Optimal Policies and the Value of Costless Returns

Janakiraman, G and Seshadri, S (2016) Dual Sourcing Inventory Systems: On Optimal Policies and the Value of Costless Returns. Production and Operations Management, 26 (2). pp. 203-210. ISSN 1937-5956

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Abstract

We study dual sourcing inventory systems with backordering and with stationary, stochastic demands. The two supply sources differ in their unit prices and lead times. We focus on the option of making costless returns to the cheaper, longer-leadtime supplier. We show that the value of this option is zero. Our analysis leading to this result includes the derivation of several structural properties of the optimal policies for dual sourcing systems with and without the return option.

Item Type: Article
Subjects: Business and Management
Date Deposited: 14 Sep 2016 19:14
Last Modified: 11 Jul 2023 18:30
URI: https://eprints.exchange.isb.edu/id/eprint/505

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