The ( S − 1, S ) Inventory Model under Time Limit on Backorders

Chandrasekhar Das
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Chandrasekhar Das: University of Saskatchewan, Saskatoon, Saskatchewan

Operations Research, 1977, vol. 25, issue 5, 835-850

Abstract: Existing models of inventory control assume that when a stockout occurs customers either wait as long as necessary or not at all for the replenishment to arrive. This paper introduces a more realistic assumption—customers are assumed to wait a fixed amount of time before cancelling their orders. The new assumption is incorporated in the ( S − 1, S ) inventory model, which is appropriate for slow-moving items. Statistical and economic measures of performance for the model are developed on the basis of certain queuing results. We then use optimization techniques to derive a minimum-cost inventory policy with or without constraints on service levels. We also derive an optimal policy for trade-offs between inventory levels and replenishment rates and provide computational approaches.

Date: 1977
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