Research Reports from the Department of Operations
Document Type
Dissertation
Publication Date
11-1-1967
Abstract
Two product periodic review dynamic inventory models are considered. At the start of each period two decisions are made for each product. How much to "normal order" with a lead time of λn periods and how much to "emergency order" with a lead time of λe periods, where λe < λn. It is assumed that the emergency ordering costs are higher than the normal ordering costs for each product. Demands in the periods are independent vector random variables with known probability density functions. Demands for individual products within a period are assumed to be non-negative, but they need not be independent. Whenever demand exceeds inventory, their difference is backordered rather than lost. The optimal ordering policy is characterized for three models. The first model is one that incorporates two revenue functions; that is, a salvage return function and a credit function. Also, a linear constraint is imposed on both products which restricts the amount that can be obtained by emergency ordering. The second model considers the case where there is a linear resource constraint which limits the total amount that can be produced or ordered for both products, both normal and emergency, during the normal lead time. The third model is one which is representative of inventory systems having limited storage capacities. There is a linear constraint on the total amount that can be stored for both products during the normal replenishment period. The second and third models discussed do not incorporate a salvage gain function or a credit function.
Keywords
Operations research, Inventory control, Mathematical models, Queuing theory, Stochastic processes
Publication Title
Dissertation/Technical Memorandums from the Department of Operations, School of Management, Case Western Reserve University
Issue
Technical memorandum no. 89 ; Submitted in partial fulfillment of the requirements for the Degree of Doctor of Philosophy.
Rights
This work is in the public domain and may be freely downloaded for personal or academic use
Recommended Citation
Wright, Gordon P., "Optimal Policies for Two Product Inventory Systems with Negotiable Lead Times" (1967). Research Reports from the Department of Operations. 395.
https://commons.case.edu/wsom-ops-reports/395