The mixed ordering policy in periodic review stochastic multi‐commodity inventory systems

T. E. Goswick and B. D. Sivazlian

Naval Research Logistics Quarterly, 1974, vol. 21, issue 3, 389-410

Abstract: In multi‐commodity inventory systems with variable setup costs, the mixed ordering policy assumes that commodities may be ordered either individually, or may be arbitrarily grouped for joint ordering. Thus, for a two‐commodity system, commodity one or commodity two or commodities one and two may be ordered incurring respectively fixed order costs of K, K1, or K2, where max (K1, K2) ≤ K ≤ K1 + K2, This paper considers a two‐commodity periodic review system. The stationary characteristics of the system are analyzed, and, for a special case, explicit solutions are obtained for the distribution of the stock levels at the beginning of the periods. In a numerical example, optimal policy variables are computed, and the mixed ordering policy is compared with individual and joint ordering policies.

Date: 1974
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Persistent link: https://EconPapers.repec.org/RePEc:wly:navlog:v:21:y:1974:i:3:p:389-410

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