Author : Stanford University. Department of Operations Research
Publisher :
ISBN 13 :
Total Pages : 154 pages
Book Rating : 4.F/5 ( download)
Book Synopsis Multiproduct Inventory Models with Set-up by : Stanford University. Department of Operations Research
Download or read book Multiproduct Inventory Models with Set-up written by Stanford University. Department of Operations Research and published by . This book was released on 1968 with total page 154 pages. Available in PDF, EPUB and Kindle. Book excerpt: The report presents a mathematical model of an inventory problem frequently encountered in practice and studies the nature of the best ordering policy to use for it. At the beginning of each of a sequence of periods an inventory manager must decide whether or not to place an order and, if so, how much of which products. His order is filled immediately and then during the period a random demand draws upon his inventory until at the beginning of the next period he makes another ordering decision. When he orders, a unit cost for each item and a set-up cost for the order are charged. The set-up cost is thus independent of the size of the order and may represent the price of such things as paperwork, tooling up for a production run, or construction of facilities. On the basis of the inventory levels at the end of a period an inventory cost is charged. This represents a holding cost for those products still in stock and a penalty cost for those whose supply is depleted. Since the actual demand is not known but random, the inventory manager does not have full control over the costs he will be charged. It is assumed, however, that he can obtain his expected costs by averaging over the random demands, and his aim then is to use an ordering policy which minimizes his expected costs. As the mathematical inventory literature is quite large it is important to emphasize four distinctive features of the model in this report: periodic review, random demand, set-up costs, and interdependence of product costs. The present study is the most general one known by the author to combine all four attributes.