Accession Number : AD0713057

Title :   FIXED SHORTAGE COSTS AND THE CLASSICAL INVENTORY MODEL,

Corporate Author : CENTER FOR NAVAL ANALYSES ARLINGTON VA

Personal Author(s) : Brown,George F. , Jr. ; Lloyd,Richmond M.

Report Date : JUL 1970

Pagination or Media Count : 21

Abstract : Many recent economic and inventory studies have included various types of fixed or lump-sum costs as important determinants of optimal behavior. In this paper, the classical inventory model is augmented to include fixed shortage costs. In general, the presence of fixed shortage costs can lead to complex optimal solutions. The purpose of this paper is to establish a set of sufficient conditions which guarantee the existence of an optimal ordering policy which is unique. The resulting optimal policy is described by a unique set of critical numbers which are bounded and decrease monotonically over the horizon for which the inventory system is to be operated. (Author)

Descriptors :   (*INVENTORY CONTROL, MATHEMATICAL MODELS), MANAGEMENT PLANNING AND CONTROL, OPTIMIZATION, COSTS, THEOREMS

Subject Categories : Operations Research

Distribution Statement : APPROVED FOR PUBLIC RELEASE