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Continuous review (s, Q) inventory system with random lifetime and two demand classes

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  • Umay Uzunoglu Kocer

    (Dokuz Eylul University)

  • Bahar Yalcin

    (Dokuz Eylul University)

Abstract

This paper examines a continuous review inventory model for perishable items with two demand classes. Demands for both classes occur according to Poisson process. The items in inventory are perishable products and have exponential lifetimes. The time after placing an order is an exponential random variable. When the on-hand inventory drops to pre-specified level s, only the priority customer demands are met whereas the demands from ordinary customers are lost. And also, the demand occurring stock-out periods are lost. The inventory system is characterized by continuous-time Markov process and steady-state probabilities are derived. The expected cost function is formulated and a numerical study is provided for optimization.

Suggested Citation

  • Umay Uzunoglu Kocer & Bahar Yalcin, 2020. "Continuous review (s, Q) inventory system with random lifetime and two demand classes," OPSEARCH, Springer;Operational Research Society of India, vol. 57(1), pages 104-118, March.
    • Handle: RePEc:spr:opsear:v:57:y:2020:i:1:d:10.1007_s12597-019-00393-0
    DOI: 10.1007/s12597-019-00393-0
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