An inventory system with periodic replenishment of emergency is an inventory system with two replenishment modes. Regular orders are placed periodically following a base stock policy and emergency characterized by a shorter and higher acquisition costs of lead. We assume that the cost penalty is more expensive than the cost of an emergency. The model has two decision variables: S (base material) and R (on the threshold of earnings per share). This paper addresses the derivation of the expected total cost model and how to get the decision variables to optimize the model. An optimal solution is obtained using the technique of recursive trapezoid.
Research Paper Inventory System
The results are compared with simulation results Tagaras and Vlachos (2001) using the same data. Trapeze technique provides an optimal solution recursively until the results of the simulation. Emergency replenishment model provides substantial cost savings in a model without the option of charging an emergency.
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