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Letter to the Editor---A Comparison of ( t , Z ) and ( z , Z ) Policies

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  • Eliezer Naddor

    (The Johns Hopkins University)

Abstract

Two widely used inventory policies, the ( t , Z ) policy and the ( z , Z ) policy, are compared in this communication. In the ( t , Z ) policy orders for replenishments are placed at regular intervals t , whereas in the ( z , Z ) policy the orders are placed only when stocks on hand and on order are equal to or below the level z . In both policies the amounts ordered raise stocks to the level Z . It is shown that in systems in which various items may be separated and analyzed independently the ( z , Z ) policy is the better policy. However, in other systems the ( t , Z ) policy may be the optimal policy. This may occur, for example, in systems in which replenishment costs are common to several items.

Suggested Citation

  • Eliezer Naddor, 1962. "Letter to the Editor---A Comparison of ( t , Z ) and ( z , Z ) Policies," Operations Research, INFORMS, vol. 10(3), pages 401-403, June.
    • Handle: RePEc:inm:oropre:v:10:y:1962:i:3:p:401-403
    DOI: 10.1287/opre.10.3.401
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