A vendor selection problem consists of two different kinds of decision making. First one is to choose the best suppliers among all possible suppliers and the next is to allocate the optimal quantities of orders among the selected vendors. ln this study, a

In this paper, we examine the effect of demand variability in multi-item inventory systems where supply lead-times are endogenously generated by a production system with finite capacity. In contrast to systems with exogenous lead times, we show that variability in lead-time demand actually decreases with demand variability. We also show that higher demand variability leads to a smaller fraction of total stock being devoted to safety stock. More significantly, we show that a sufficiently large increase in demand variability can lead to the elimination of safety stocks altogether. These results suggest that strategies used to reduce lead-time demand variability would be less valuable when demand variability is high.