Development of an inventory model for a manufacturer considering random capacity of supplier and supply disruption

Abstract

A supply chain is a set of facilities, suppliers, customers, products and methods of controlling inventory, purchasing and distribution. In a supply chain, the flow of goods between a supplier and customer passes through several stages, and each stage may consist of many facilities. To effectively respond and recover from disruptions it is vital to achieve the supply chain objectives. An inventory model is developed for a manufacturer with one supplier by considering random capacity of the supplier and random availability of the supplier assuming zero delivery lead time. Backorders were allowed and it had two parts- one which was unit dependent and the other was both unit and time dependent. This study developed an optimal order quantity and a reordering point for minimizing the average cost per cycle. The average cost function was derived and using genetic algorithm the average cost per cycle was minimized. A numerical example was also utilized for examining the benefit and applicability of the proposed model in practice.