Thesis defense of Taher Ahmadi, March 11, 2019

On Monday, March 11, 2019, Taher Ahmadi will defend his PhD thesis “Inventory control systems with commitment lead time”. This thesis has been supervised by prof.dr. A.G. de Kok, I.J.B.F. Adan and dr. Z. Atan. The ceremony will take place in the Senaatszaal of the Auditorium building, Eindhoven University of Technology at 16:00 hrs.

In this thesis, we investigate the profitability of a preorder strategy in the context of inventory and service management. For this purpose, we frame the thesis into six chapters.  Chapter 1 represents our research motivations and contributions. Chapter 2 provides a comprehensive review of the recent literature on inventory management with the preorder strategy, under which customers provide advance demand information (ADI), and in turn, they receive a bonus. In this setting, customers provide ADI based on a predetermined time window called commitment lead time and receive the bonus based on the length of the commitment lead time. We refer to the bonus from a supplier’s perspective as commitment cost.  We consider three inventory systems with preorder strategy. We aim to find the optimal control policy as a combination of the optimal inventory replenishment and preorder strategies such that the system total cost is minimized.  In these three inventory systems, we mainly deal with single end-product, Poisson demand, continuous base-stock policy, fixed replenishment lead times, and backordered demand. Each of these three systems is studied in a dedicated chapter as follows. In Chapter 3, we consider a single-location inventory system with preorder strategy. We prove the optimality of bang-bang and all-or-nothing policies for the commitment lead time and the base-stock policy, respectively.  In Chapter 4, we extend our studies in Chapter 3, by replacing the backordering cost with time-based service measures. We study the system with two time-based service measures; average customer waiting time and individual customer waiting time. We find that when the firm wants to provide a quicker response to a higher percentage of the customers, the value of commitment lead time in terms of cost reduction is more highlighted. In Chapter 5, we consider a two-component, single-end product ATO system with preorder strategy. We find that the optimal commitment lead time is either zero or equals to the replenishment lead time of one of the components. We find the unit commitment cost thresholds which determine the conditions under which one of these three cases holds. Conclusions are drawn in Chapter 6.