Decision models for single-period products with two ordering opportunities

Abstract

This paper considers the very common situation in which a single-period "newsboy" type product may be ordered twice during a period. The inventory decision model is shown to be substantially more complicated than the simple one-order-per-period newsboy problem, but the model can nevertheless be easily solved with today's computers and software. The model's solution tells an operations manager how much to order/produce initially, when to place a second order (if at all) and for what quantity. Less quantitative heuristic decision rules are also identified. The last part of the paper extends our basic model to consider a non-negligible set-up cost for the second order; it serves as an illustration of how one might want to extend our basic two-order model to handle a large number of different combinations of additional factors such as the second-order's delivery delay time and price differential. © 1998 Elsevier Science B.V. All rights reserved.