Got organic milk? Joint inventory model with supply uncertainties and partial substitution

We study the joint inventory problem for two partially substitutable (organic and regular) products with different levels of supply reliability. Increasing substitution rate results in a decreased organic order but an increased regular order, as the regular product becomes an effective substitute during the organic product's stock-out. Higher disruption risk increases the order size of both products, but higher yield uncertainty only increases the organic order size whereas the regular order size decreases or remains unchanged. (C) 2021 Elsevier B.V. All rights reserved.

Automated summary

The study shows that increasing substitution rate decreases organic order size but increases regular order size; higher disruption risk increases order size for both products, while higher yield uncertainty only affects organic order size.