Cost analysis of an (S−1,S) inventory system with two demand classes and rationing

K. Sapna Isotupa ()

Annals of Operations Research, 2015, vol. 233, issue 1, 421 pages

Abstract: In this paper we analyze a continuous review, lost sales (S−1,S) inventory system with two demand classes—high priority and low priority. We compare two different policies—one where the two classes of customers are treated exactly alike and the other where a threshold rationing policy is used. We prove that under certain conditions there is a sub-optimal rationing policy which yields a lower cost for the supplier and higher service levels for both the high priority and low priority customers than the optimal policy where the two customers are treated alike. Copyright Springer Science+Business Media New York 2015

Keywords: Markov chain; Stochastic processes; Inventory; Multiple classes of customers; Rationing; Cost comparison (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s10479-013-1407-3

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