An Optimum Ordering Policy and its Estimation in a Two-Supplier Inventory Model with Uncertainties in Supply

Abstract

We consider a single-item one-period inventory model where the market demand is assumed to be random and the item under consideration is obtained from two suppliers who also supply random amounts with means equal to the order placed to the supplier concerned. Under new better than used in expectation (NBUE) assumption on the supply distributions, possibly different, a strategy which maximizes a minimum profit has been proposed. An estimate for this maximin order quantity whenever the (customer) demand distribution is unknown has been obtained and strong consistency of the suggested estimator established.

AMS (2000) Subject Classification: Primary 90B05; Secondary 62G99, 60F15.