Optimal Continuous Time (s,S) Policies When Deliveries are Subject to Time Lags.
ARCON CORP WALTHAM MA
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Scarf has studied the stationary operating characteristics of continuous time s,S procedures, which order S-s units whenever the number of items in stock plus the number of items on back order is less than or equal to s. In the present work, a similar model is considered with one important change in the ground rules Once an order is placed to replenish the inventory, no subsequent orders can be placed until the order is delivered. The average cost per unit time, associated with the class of policies which places orders of size S-s, whenever the stock on hand falls below s is examined. Once having derived an analytic expression for the average cost per unit time, it is a relatively straightforward computational task to produce the values of s, S which minimize this cost. Several numerical case studies are made which exhibit the sensitivity of the optimal policy to the cost parameters of the model. Author
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