Letter to the Editor---A Comparison of ( t, Z ) and ( z, Z ) Policies

Eliezer Naddor
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Eliezer Naddor: The Johns Hopkins University

Operations Research, 1962, vol. 10, issue 3, 401-403

Abstract: Two widely used inventory policies, the ( t , Z ) policy and the ( z , Z ) policy, are compared in this communication. In the ( t , Z ) policy orders for replenishments are placed at regular intervals t , whereas in the ( z , Z ) policy the orders are placed only when stocks on hand and on order are equal to or below the level z . In both policies the amounts ordered raise stocks to the level Z . It is shown that in systems in which various items may be separated and analyzed independently the ( z , Z ) policy is the better policy. However, in other systems the ( t , Z ) policy may be the optimal policy. This may occur, for example, in systems in which replenishment costs are common to several items.

Date: 1962
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