Lead time reduction in continuous review inventory model

Abstract

The Japanese successful experiences of using Just-In-Time (JIT) production show that the advantages and benefits associated with the efforts to control the lead-time. The goal of JIT inventory management philosophies is the focus that emphasizes high quality. keeps low inventory level and lead-time to a practical minimum. Thus, lead time can be reduced. the expense of an additional investment cost, so as to improve customer service level. This article combines the concept of capital investment allocated to reducing lead time. A continuous review inventory model is developed and a procedure is provided to find the optimal order quantity and optimal lead time reduction investment.