Operations Research Stack Exchange is a question and answer site for operations research and analytics professionals, educators, and students. It only takes a minute to sign up.
Sign up to join this community
Safety stocks account for uncertainty both on demand and provider lead times, but never mention how to include the effect of incomplete orders. For example, what would happen if a provider always delivers on time but on average orders have 50% of the promised quantity?
I couldn't find any papers that include this effect.
What you’re describing is known as inventory optimization under yield uncertainty. There is quite a bit of literature on it. Two relevant literature reviews are Yano and Lee (OR 1995) and Grosfeld-Nir and Gerchak (AOR 2004).
Yield uncertainty is only one type of supply uncertainty. A closely related form is disruptions; my students and I wrote a review paper on this topic a few years ago (Snyder, et al., IIET 2016).
We discuss inventory models with both yield uncertainty and disruptions in our textbook, if that helps.
