Optimizing supply shortage decisions in base stock distribution operations Academic Article uri icon


  • This paper addresses policies and agreements between suppliers and customers for handling supply shortages in base-stock systems under uncertain demand. We investigate the impacts that backlogging and expediting decisions have on inventory and transportation costs in these systems and develop a model for deciding whether a supplier should completely backlog, completely expedite, or employ some combination of backlogging and expediting shortages. Our results indicate that practical cases exist where some combination of both expediting and backlogging supply shortages outperforms either completely expediting or backlogging all shortages. Including transportation costs in our model provides incentive to employ 'hybrid' policies that partially expedite and partially backlog excess demands within a given period. Our model demonstrates how inventory policy decisions directly impact transportation costs and provides a heuristic approach for jointly minimizing expected inventory and transportation costs. 2003 Kluwer Academic Publishers.

published proceedings


author list (cited authors)

  • Geunes, J., & Zeng, A. Z.

citation count

  • 2

complete list of authors

  • Geunes, J||Zeng, AZ

publication date

  • May 2003