Continuous-review inventory problem with random supply interruptions

This paper considers a continuous-review stochastic inventory problem with random demand and random lead-time where supply may be disrupted due to machine breakdowns, strikes or other randomly occurring events. The supplier availability is modelled as a semi-Markov process (more specifically, as an alternating renewal process). The standard (q, r) policy is used when the supplier is available (ON), i.e., when the inventory position reaches the …