Inventory Control with Probabilistic Demand and Periodic Withdrawals

Warren H. Hausman and L. Joseph Thomas
Additional contact information
Warren H. Hausman: Massachusetts Institute of Technology
L. Joseph Thomas: Cornell University

Management Science, 1972, vol. 18, issue 5-Part-1, 265-275

Abstract: Many manufacturing firms produce component parts both for assembly into new products and to meet orders for spare parts. An inventory model for this situation would involve two types of demands: probabilistic demand as spares and deterministic (or scheduled) withdrawals as components for assembly. Relevant costs would include a setup cost for replenishment orders, inventory carrying costs, and backorder costs. An analytical model approximating these characteristics is formulated. An optimal dynamic program for the periodic review case is briefly discussed; this policy is extremely costly to implement, however. Two feasible operating policies are considered in the paper: a continuous review (Q, r)-type policy and a simple periodic review scheduling heuristic. The paper concludes with sample economic comparisons of the cost of the (Q, r)-type policy and the heuristic policy for a set of numerical examples.

Date: 1972
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.18.5.265 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:18:y:1972:i:5-part-1:p:265-275

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().