Letter to the Editor---An Inventory Model for Repair Parts---Approximations in the Case of Variable Delivery Time

Martin J. Beckmann
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Martin J. Beckmann: Cowles Foundation for Research in Economics, Yale University, New Haven, Connecticut

Operations Research, 1959, vol. 7, issue 2, 256-258

Abstract: The following continuous inventory problem arises in connection with the storage of repair parts. Let demand be for one unit at a time and Poisson, and let delivery time be either fixed or a random variable of known distribution. The size of an order need not be specified until the time of actual production or delivery. The following costs are assumed to be given. A storage cost proportional to quantity of stock and time, a fixed cost of ordering, and a penalty for shortage proportional to the amount of the shortage and its duration. No orders are lost. Alternatively the probability of a loss may be incorporated in the shortage penalty.

Date: 1959
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