Stochastic inventory control systems with consideration for the cost factors based on EBIT

Kenichi Nakashima, Thitima Sornmanapong, Hans Ehm, Geraldine Yachi

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)


Due to a short market life-span and high uncertainty in future demand, supply chain management is a competitive advantage which plays an important role in today`s global semiconductor industry. A very important consequence of uncertain demand and having long lead time is the great risk of incurring shortages and excessive inventory. This paper considers the view of the second tier semiconductor supplier in automotive industries and studies, using the periodic review analysis, a single item single stage inventory system with stochastic demand. The only uncertainty is associated with demand. Assuming holding, production, salvage and backorder costs, we determine the optimal numerical value of the level s (reorder point) using a simulation approach, and thus obtain the optimal inventory policy to minimize the total expected inventory cost while being able to achieve the desired customer service levels.

Original languageEnglish
Pages (from-to)68-74
Number of pages7
JournalInternational Journal of Supply Chain Management
Issue number3
Publication statusPublished - 2014 Jan 1
Externally publishedYes


  • (s, Q) inventory model
  • Backorder
  • EBIT
  • Second tier supplier
  • Stochastic Demand

ASJC Scopus subject areas

  • Information Systems and Management
  • Management Information Systems
  • Information Systems


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