Operational Research Techniques in Stochastic Inventory Management

Common characteristics of inventory systems include uncertain demand and restrictions such as budgetary and storage space constraints. Several authors have examined budget constrained multi-item stochastic inventory systems controlled by continuous review policies without considering marginal review shortage costs. Existing models assume that purchasing costs are paid at the time an order is placed, which is not always the case since in some systems purchasing costs are paid when order arrive. In the latter case the maximum investment in inventory is random since the inventory level when an order arrives is a random variable. Hence payment of purchasing costs on delivery yields a stochastic budget constraint for inventory. In this model with mixture of back orders and lost sales, we assume that mean and variance of lead time demand are known but their probability distributions are unknown. After that, we apply the minimax distribution free procedure to find the minimum expected value of the random objective function with budget constraint. The random budget constraint is transformed to crisp budget constraint by chance-constraint technique.

Autorentext

Dr. Antara Kundu is a gold medalist in Applied Mathematics from University of Burdwan, WB, India. Besides her love in the field of Mathematics, she is a good home maker, who devotes her time to her family, spent leisure time in drwaing, paintaing and singing of classical Indian songs.