American Journal of Industrial Engineering
ISSN (Print): 2377-4320 ISSN (Online): 2377-4339 Website: http://www.sciepub.com/journal/ajie Editor-in-chief: Ajay Verma
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American Journal of Industrial Engineering. 2018, 5(1), 1-11
DOI: 10.12691/ajie-5-1-1
Open AccessArticle

Inventory Optimization for Combined Stock-depended and Stochastic Demand

Nasib Al Habib1, and Shuva Ghosh2

1Department of Mechanical & Production Engineering, Ahsanullah University of Science & Technology

2Department of Industrial and Production Engineering, Bangladesh University of Engineering and Technology

Pub. Date: February 06, 2018

Cite this paper:
Nasib Al Habib and Shuva Ghosh. Inventory Optimization for Combined Stock-depended and Stochastic Demand. American Journal of Industrial Engineering. 2018; 5(1):1-11. doi: 10.12691/ajie-5-1-1

Abstract

This work develops an optimal inventory policy for stock-dependent demand items, taking into account both lead time and lead time demand uncertainties. (Q,R) modeling approach has been implemented to deal with uncertainties of demand and lead time. Unlike previous models, this model combines a deterministic approach with a stochastic approach to formulate a hybrid one. Holding cost per unit per unit time is considered an increasing function of quantity in storage up to reorder point and lead time demand is assumed to be proportional to the span of lead time. Lead time is normally distributed and since demand during lead time is proportional to it, the lead time demand also follows a normal distribution. This is a single objective unconstrained optimization model that aims at minimizing inventory cost where the decision variables are order quantity and reorder point.

Keywords:
stock-depended demand stochastic demand normal distribution inventory optimization fill-rate

Creative CommonsThis work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

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