Replenishment policies for production/inventory systems with endogenous lead times

Inventory control has been a popular research topic for a long time. The optimality of various inventory replenishment policies has been studied under a variety of assumptions in demand and lead-time distributions and cost structures. However, its optimality is always studied in a local inventory environment where lead-times are treated exogenously with respect to the replenishment policy. This assumption, however, does not hold in integrated production/inventory systems, where the replenishment policy of the inventory control generates orders that load the production facility. In a finite capacity production environment, the lead-times are load dependent and affected by the current size of the order queue in the production system. In previous research we have studied the impact of traditional replenishment rules in production/inventory systems and we have shown how the inclusion of endogenous lead-times many lead to higher costs. In the proposed research project we aim to propose a class of replenishment policies that are different from the traditional policies and perform better in a production/inventory environment.