The emergency orders have a short lead time and they may also have different ordering costs compared to normal orders. Demands not satisfied immediately from inventory are backordered. We formulate a long-run average cost model that includes ordering costs for the two types of orders, holding costs, and backordering costs. Backordering costs are considered both as a unit-based cost and as a cost rate. For comparisons, an algorithm for finding a best simple emergency-order policy is also implemented.
Simulation is used to check the validity of our model.
Numerical results are presented for a set of parameter variations and compared to results without emergency orders as well as to results from an earlier model in the literature. Our results show that substantial cost savings might be obtained by using emergency orders, especially when backordering costs are high. A number of jobs are to be scheduled on a number machines while taking into consideration transfer times, release dates, deadlines and workforce limitations. The jobs consist of transfer lots but inserted idle time is not allowed. The model allows for varied types of objectives separable in the jobs such as weighted flow time, total weighted tardiness etc.