THE RELATIONSHIP BETWEEN DECISION VARIABLES AND PENALTY COST PARAMETER IN (Q, R) INVENTORY MODELS.
ARMY LOGISTICS MANAGEMENT CENTER FORT LEE VA
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The paper is concerned with the optimum decision variables found using order quantity, reorder point Q,R inventory models. It examines whether the optimum variables Q and R are necessarily monotonic functions of the backorder cost parameter or equivalently of the performance objective. For a general class of models it is proved that R must increase as the performance objective is raised, and an inequality condition is derived which governs how Q will change. Probability distributions of lead time demand are cited or found for which Q increases, Q decreases and Q is independent of increases in performance objectives or backorder cost parameter. Author
- Operations Research