A fluid EOQ model of perishable items with intermittent high and low demand rates

O.J. Boxma, D. Perry, S. Zacks

Onderzoeksoutput: Boek/rapportRapportAcademic

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We consider a stochastic uid EOQ-type model with demand rates that operate in a two-state random environment. This environment alternates between exponentially distributed periods of high demand and generally distributed periods of low demand. The inventory level starts at some level q, and decreases linearly at rate a during the periods of high demand, and at rate b <a at periods of low demand. The inventory level is refilled to level q when level 0 is hit or when an expiration date is reached, whichever comes first. We determine the steady-state distribution of the inventory level, as well as other quantities of interest like the distribution of the time between successive refills. Finally, for a given cost/revenue structure, we determine the long-run average profit, and we consider the problem of choosing q such that the profit is optimized.
Originele taal-2Engels
Plaats van productieEindhoven
UitgeverijEurandom
Aantal pagina's22
StatusGepubliceerd - 2010

Publicatie series

NaamReport Eurandom
Volume2010051
ISSN van geprinte versie1389-2355

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