A point process approach to inventory models

Christian Max Møller

Applied Stochastic Models in Business and Industry, 2000, vol. 16, issue 2, 111-126

Abstract: The aim of the present paper is to make use of the modern theory of point processes to study optimal solutions for single‐item inventory. Demand for goods is assumed to occur according to a compound Poisson process and production occurs continuously and deterministically between times of demand, such that the inventory evolves according to a Markov process in continuous time. The aim is to propose a way of finding optimal production schemes by minimizing a certain expected loss over some finite period. There are holding/production costs depending on the stock level, and random penalty amounts will occur due to excess demand which is assumed backlogged. For simplicity we will not incorporate fixed costs. We give some numerical illustrations. Copyright © 2000 John Wiley & Sons, Ltd.

Date: 2000
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https://doi.org/10.1002/1526-4025(200004/06)16:23.0.CO;2-1

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Persistent link: https://EconPapers.repec.org/RePEc:wly:apsmbi:v:16:y:2000:i:2:p:111-126

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