On offering economic incentives to backorder Academic Article

abstract

• We study a strategy to manage demands that occur when an inventory system is temporarily out of stock: offer the customer facing the unsatisfied demand an economic incentive to backorder. We explore the benefits of this inventory management strategy by analyzing a model of an inventory system with stochastic demand and random supply disruptions, where the probability that a customer facing an unfilled demand will backorder (as opposed to becoming a lost sale) can be influenced by an economic incentive. Our results provide several insights regarding this inventory management strategy and suggest that the benefits of offering backorder incentives can be significant. 1998, Taylor and Francis Group, LLC.

authors

• Arreola-Risa, Antonio

published proceedings

• IIE TRANSACTIONS

author list (cited authors)

• DeCroix, G. A., & Arreola-Risa, A.

citation count

• 22

complete list of authors

• DeCroix, GA||Arreola-Risa, A

publication date

• January 1998

publisher

• Taylor & Francis  Publisher

published in

• IIE Transactions  Journal

Digital Object Identifier (DOI)

• 10.1080/07408179808966517

start page

• 715

end page

• 721

volume

• 30

issue

• 8

URL

• http%3A%2F%2Fdx.doi.org%2F10.1080%2F07408179808966517