Optimal inventory policies in contagious demand models

Arunachalam Ravindran

Naval Research Logistics Quarterly, 1972, vol. 19, issue 1, 191-203

Abstract: In the past, contagious distributions have been successfully applied in bacteriology, entomology, and accident statistics. This paper applies the notion of contagious distributions in the inventory control of new products and seasonal or style goods, which have an lying “true contagion” for their demands, namely, the influence of past demands on occurrence of demands. A contagious distribution is derived by assuming a nonstationary Poisson process where the demand rate at any instant depends on the past demands to that instant. Using this contagious distribution, an inventory model is developed seasonal goods and new product lines. Optimal order policies as a function of the initial level and the review period are derived.

Date: 1972
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https://doi.org/10.1002/nav.3800190117

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Persistent link: https://EconPapers.repec.org/RePEc:wly:navlog:v:19:y:1972:i:1:p:191-203

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