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Deterministic Inventory Models

In: Materials Management

Author

Listed:
  • Prem Vrat

    (ITM University)

Abstract

This chapter discusses deterministic inventory models with repetitive purchase decisions – dynamic inventory models. Under continuous review models, it discusses the most classical Wilson’s lot size model to determine EOQ and examines its sensitivity with respect to deviation from EOQ as well as errors in parameter estimation. EOQ is a very robust model wherein even with ±10 % deviations from EOQ for operating convenience or for accepting vendor’s preconditions, there is no significant adverse effect on the total system cost. Variants of the EOQ model such as staggered supplies and planned backlogging are shown to improve the system economics and may be used. JIT/zero-inventory system is shown to be a special case of staggered supplies model. Lost sales policy is shown to be an “either/or” policy and can be used to determine selling price of items. Multi-item model with budget constraint and coordinated inventory policy for multi-item single source model are also discussed showing the economic benefits of coordination. For B class items, simplified periodic review models with prescribed time interval for single as well as for multiple items under storage space constraint are included.

Suggested Citation

  • Prem Vrat, 2014. "Deterministic Inventory Models," Springer Texts in Business and Economics, in: Materials Management, edition 127, chapter 6, pages 81-103, Springer.
    • Handle: RePEc:spr:sptchp:978-81-322-1970-5_6
    DOI: 10.1007/978-81-322-1970-5_6
    as

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