A continuous review (s, Q) inventory system with priority customers and arbitrarily distributed lead times

In this article we analyze a lost sales (s,Q) inventory system with two types of customers and stochastic lead times. Demands from each type of customer arrive according to two independent Poisson processes. A comparative study of the average cost rate for the cases where there is differentiation between service to customers based on the type of customer and the case where there is no differentiation between customers is carried out by using the concepts of rationing. We provide numerical examples where differentiation between customers yield lower cost and lower shortage rates for both types of customers.

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