We consider the problem of setting safety stock when both the demand in a period and the lead time are random variables. There are two cases to consider. In the first case the parameters of the demand and lead time distributions are known; in the second case they are unknown and must be...

In this paper we consider a single product multi-period inventory problem for which the penalty cost consists of two parts, a lump-sum portion which is independent of the size of the shortage and a portion which is linear in the size of the shortage. We show that for all nonincreasing demand...

Optimal solutions for the dynamic lot-sizing problem with deterministic demands but stochastic lead times are "lumpy." If lead time distributions are arbitrary except that they are independent of order size and do not allow orders to cross in time, then each order in an optimal solution will...

The marginal cost information needed to implement traditional inventory models is not likely to be available in practice. The most important inventory management issues in practive involve aggregate objectives and constraints while the richest theoretical models deal with single item management....

It has been observed that firms alter year-end inventory policies in response to accounting tax incentives. This study proposes a stochastic ordering policy model which quantifies these effects. An innovative feature is its use of two decision variables: an initial order-up-to-level at the...

A simple model is presented which allows us to determine the optimal size, fillup, and drawdown rates for a Strategic Petroleum Reserve (SPR) under a variety of supply and demand conditions. The optimal policy variables are determined by minimizing an analytic expression which we derive for the...

A method is developed to calculate an (s, S) policy that minimizes the average stationary cost in an inventory system with: constant lead time, fixed order cost, linear holding cost per unit time, linear penalty cost per unit short, discrete compound Poisson demand, and lost sales. It is assumed...

This paper considers an inventory system which maintains stock to meet both high and low priority demands. This model is suggested by the operation of a spare parts pool in a military depot: high priority demands are those which might result in the grounding of an aircraft, for example, while...

This paper considers the optimal control of a production system which is composed of two distinct production processes, types A and B, that produce two different products, 1 and 2, having distinct random demands. Production type A produces both products in amounts determined by a fixed set of...

This paper concerns a multilocation newsboy problem with normal demand at each location and identical linear holding and penalty cost functions at each location. Consolidation of demand from several facilities is considered, and an expression is derived for the resulting expected holding and...