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An Optimal Final Inventory Model

Author

Listed:
  • G. Hadley

    (University of Chicago and University of California, Berkeley)

  • T. M. Whitin

    (University of Chicago and University of California, Berkeley)

Abstract

A model is developed which allows the determination of the optimal inventory level for an item at any time if no additional procurements are to be made. It is assumed that the item has a known date of obsolescence and that the demand is Poisson distributed with a fixed mean over the useful life of the tem. The model constitutes an extension of other life-of-type models in that both costs which are incurred at a fixed point in time (liquidation losses) and other costs which are a function of time (carrying charges and stock-out costs) are included. In many operational situations both of these types of costs are relevant.

Suggested Citation

  • G. Hadley & T. M. Whitin, 1961. "An Optimal Final Inventory Model," Management Science, INFORMS, vol. 7(2), pages 179-183, January.
    • Handle: RePEc:inm:ormnsc:v:7:y:1961:i:2:p:179-183
    DOI: 10.1287/mnsc.7.2.179
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    Cited by:

    1. Jochen Schlapp & Moritz Fleischmann & Danja Sonntag, 2022. "Inventory timing: How to serve a stochastic season," Production and Operations Management, Production and Operations Management Society, vol. 31(7), pages 2891-2906, July.
    2. James T. Treharne & Charles R. Sox, 2002. "Adaptive Inventory Control for Nonstationary Demand and Partial Information," Management Science, INFORMS, vol. 48(5), pages 607-624, May.
    3. Hur, Mansik & Keskin, Burcu B. & Schmidt, Charles P., 2018. "End-of-life inventory control of aircraft spare parts under performance based logistics," International Journal of Production Economics, Elsevier, vol. 204(C), pages 186-203.
    4. Rachel Lacroix & Anna Timonina-Farkas & Ralf W. Seifert, 2023. "Utilizing additive manufacturing and mass customization under capacity constraints," Journal of Intelligent Manufacturing, Springer, vol. 34(1), pages 281-301, January.
    5. P. Majumder & U. K. Bera & M. Maiti, 2020. "An EPQ model of substitutable products under trade credit policy with stock dependent and random substitution," OPSEARCH, Springer;Operational Research Society of India, vol. 57(4), pages 1205-1243, December.

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