Research Reports from the Department of Operations
Document Type
Report
Publication Date
4-1-1966
Abstract
Most inventory depletion analysis has been concerned with the case of a deterministic field life function. Since it is rarely the case that the exact field life function of a stock of items would be known, it is more reasonable to treat the case where the field life of an item is a random variable X(S) which depends only on the age, S, of the item upon issuance. In this stochastic case, it is shown that the policy of issuing the oldest item first (FIFO) is optimal provided E[X(S)] = aS + b where a > 0, b > 0, i.e., where the items have a linearly increasing mean value function. Furthermore by making some additional, but behaviorally not restrictive, assumptions, it is shown that FIFO is optimal for E[X(S)] = aS + b where a > -1 and b > 0.
Keywords
Stochastic processes, Operations research, Inventory control--Mathematical models, Queuing theory, Logistics--Management, Industrial management--Mathematical models
Publication Title
Technical Memorandums from the Department of Operations, School of Management, Case Western Reserve University
Issue
Technical memorandum no. 50
Rights
This work is in the public domain and may be freely downloaded for personal or academic use
Recommended Citation
Pierskalla, William P., "Inventory Depletion Management With Stochastic Field Life functions" (1966). Research Reports from the Department of Operations. 264.
https://commons.case.edu/wsom-ops-reports/264