IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v25y1979i4p374-384.html
   My bibliography  Save this article

An Inventory Model with Full Load Ordering

Author

Listed:
  • Katarzyna Iwaniec

    (Institute of Telecommunication, Warsaw)

Abstract

We consider a discrete review, single product, dynamic inventory model with stochastic demands. The ordering cost is assumed to consist of a linear purchase cost and a cost K for each vehicle used. We examine the simple policy: "If the stock level at the beginning of period n does not exceed some critical number T n , order the smallest number of full vehicle loads which will raise the inventory level just above T n . If the stock level is above T n do not order." Conditions ensuring that this full load ordering rule minimizes total expected cost are given. We prove that the sequence of critical numbers T 1 , T 2 , ... is bounded and nondecreasing and we find a limiting value T that characterizes an optimal infinite horizon policy. The conditions include typical assumptions, such as the convexity and differentiability of the expected one period holding and shortage cost. The most interesting condition involves the variation in the demand distribution over intervals of length equal to the vehicle capacity. As one would expect, it is satisfied if capacity is small or K is large. The case of exponential demand and linear holding and shortage costs is treated. In this situation, the conditions are easy to check and T is found explicitly.

Suggested Citation

  • Katarzyna Iwaniec, 1979. "An Inventory Model with Full Load Ordering," Management Science, INFORMS, vol. 25(4), pages 374-384, April.
  • Handle: RePEc:inm:ormnsc:v:25:y:1979:i:4:p:374-384
    DOI: 10.1287/mnsc.25.4.374
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.25.4.374
    Download Restriction: no

    File URL: https://libkey.io/10.1287/mnsc.25.4.374?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liqing Zhang & Sıla Çetinkaya, 2017. "Stochastic Dynamic Inventory Problem Under Explicit Inbound Transportation Cost and Capacity," Operations Research, INFORMS, vol. 65(5), pages 1267-1274, October.
    2. Osman Alp & Woonghee Tim Huh & Tarkan Tan, 2014. "Inventory Control with Multiple Setup Costs," Manufacturing & Service Operations Management, INFORMS, vol. 16(1), pages 89-103, February.
    3. Ozgun Caliskan-Demirag & Youhua (Frank) Chen & Yi Yang, 2012. "Ordering Policies for Periodic-Review Inventory Systems with Quantity-Dependent Fixed Costs," Operations Research, INFORMS, vol. 60(4), pages 785-796, August.
    4. Mendoza, Abraham & Ventura, José A., 2008. "Incorporating quantity discounts to the EOQ model with transportation costs," International Journal of Production Economics, Elsevier, vol. 113(2), pages 754-765, June.
    5. Shuangchi He & Dacheng Yao & Hanqin Zhang, 2017. "Optimal Ordering Policy for Inventory Systems with Quantity-Dependent Setup Costs," Mathematics of Operations Research, INFORMS, vol. 42(4), pages 979-1006, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:25:y:1979:i:4:p:374-384. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.