Copyright © 2009 Jong-Wuu Wu et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
This paper allows
the backorder rate as a control variable to
widen applications of a continuous review
inventory model. Moreover, we also consider the
backorder rate that is proposed by combining Ouyang
and Chuang (2001)
(or Lee (2005)) with Pan and Hsiao
(2001) to present a new form. Thus, the backorder
rate is dependent on the amount of shortages and
backorder price discounts. Besides, we also
treat the ordering cost as a decision variable.
Hence, we develop an algorithmic procedure to
find the optimal inventory policy by minimax
criterion. Finally, a numerical example is also
given to illustrate the results.