Optimal policies for a finite-horizon batching inventory model (original) (raw)

REVIEW OF LITERATURE ON VARIOUS FACTORS AFFECTING INVENTORY POLICY

isara solutions, 2011

The literature on the inventory modelling is increasing quickly. The aim of this article to present a renewed information about the developed inventory models under different situations. In this paper recent contribution in the field of inventory modelling for supply chain ,integrated models , defective and non-defective items are projected.

QUANTITATIVE MODELS FOR THE PLANNING AND CONTROL OF INVENTORIES

A company is planning to purchase 90 800 units of a particular item in the year ahead. The item is purchased in boxes, each containing 10 units of the item, at a price of £200 per box. A safety stock of 250 boxes is kept. The cost of holding an item in stock for a year (including insurance, interest and space costs) is 15% of the purchase area. The cost of placing and receiving orders is to be estimated from cost data collected relating to similar orders, where costs of £5910 were incurred on 30 orders. It should be assumed that ordering costs change in proportion to the number of orders placed. 2% should be added to the above ordering costs to allow for inflation. Required: Calculate the order quantity that would minimize the cost of the above item, and determine the required frequency of placing orders, assuming that usage of the item will be even over the year. (8 marks) ACCA Foundation Stage Paper 3 Most textbooks consider that the optimal reorder quantity for materials occurs when 'the cost of storage is equated with the cost of ordering'. If one assumes that this statement is acceptable and also, in attempting to construct a simple formula for an optimal reorder quantity, that a number of basic assumptions must be made, then a recognised formula can be produced using the following symbols: C o = cost of placing an order C h = cost of storage per annum, expressed as a percentage of stock value D = demand in units for a material, per annum Q = reorder quantity, in units Q/2 = average stock level, in units p = price per unit

Exact Computation of Optimal Inventory Policies Over an Unbounded Horizon

Mathematics of Operations Research, 1991

An inventory scheduling model with forbidden time intervals is analyzed. The objective is to minimize the long-term average cost per time unit. Unlike most of the literature on inventory theory, no restrictive assumptions are made a priori about the nature of optimal solutions. Rather it is proved that optimal policies exist, and that some of them are cyclic with cycles of a particular structure. It is then shown that such optimal policies can be computed and an algorithm is given.