DETERMINISTIC INVENTORY SYSTEMS WITH POWER DEMAND PATTERN

Abstract

This paper presents a detailed analysis of inventory systems in which the demand for inventory is deterministic, varies by time in each order cycle, and follows a power pattern. Shortages are allowed. The decision variables are the initial stock level and the scheduling period. Holding cost, shortage cost, and replenishment cost are considered. Several scenarios are studied. First, the inventory system without shortages is analyzed, followed by systems with shortages. The full backordering and the completely lost sales systems are discussed and the optimal policy for each is explicitly determined. Several numerical examples are provided to illustrate the efficient inventory policy and the minimum cost for each inventory system.