InventorySystems - INVENTORY SYSTEMS Inventory Systems...

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INVENTORY SYSTEMS
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Assume periodic review, i.i.d. random demands, constant (possibly non-zero) lead times and full backlogging. When to order? How much to order? Inventory Systems
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Inventory Costs Ordering Cost setup cost for placing an order, K per-unit ordering cost, c order amount, Q i Holding (Storage) Cost per-period per-unit of inventory, h inventory level , X i Shortage (Unsatisfied Demand) Cost per-period per-unit of inventory, p otherwise 0 0 + i i Q cQ K ) 0 , max( i X p - ) 0 , max( i X h ( s , S ) inventory control policy is optimal for this cost structure IGLEHART, 1963
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When the inventory position (inventory level + quantity on order) falls to or below the level s, place an order to bring the inventory position up to S. (s,S) Ordering Policy
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Demand in period i, D i Constant lead time, L Cost Information ( K , c, h, p ) Inventory control policy parameters (
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This note was uploaded on 03/01/2012 for the course IE 12 taught by Professor Abraham during the Spring '12 term at Abraham Baldwin Agricultural College.

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InventorySystems - INVENTORY SYSTEMS Inventory Systems...

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