Ordering policies for inventory systems with expediting

Abstract

Most studies in the inventory literature assume either no expediting or placing an additional order in the case of an emergency. However, many companies do expedite orders or shipments. In this paper, we propose two continuous-review single-item policies when expediting is allowed. The first is a modified Allen and D'Esopo's model when expediting is possible before a threshold time point, while the second is a heuristic policy when an expediting decision can be made at a certain time point during the lead time. We also devise a simple tabulation algorithm to find the optimal operational parameters. Computational results show that the proposed policies perform better than the ordinary no-expediting model, especially when the service level is high.

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