Stochastic Inventory Models for Deteriorating Items with Random Lead Time and Demand
DOI:
https://doi.org/10.29070/28ws4b18Keywords:
Stochastic inventory models, deteriorating items, random lead time, random demand, inventory control, optimization, perishable goods, uncertaintyAbstract
In inventory management, controlling deteriorating items with uncertain demand and lead time is a complex problem that requires a comprehensive stochastic approach. This paper presents a stochastic inventory model for deteriorating items, where both the demand rate and lead time are assumed to be random variables. The model aims to determine the optimal order quantity and reorder points that minimize total inventory costs, which include holding costs, ordering costs, and shortage costs. We assume that items deteriorate over time, and their shelf life is affected by the stochastic nature of the demand and lead time. The demand is modeled as a random process, while lead time follows a probability distribution that reflects the uncertainty in supplier delivery times. Through analytical and numerical methods, the model evaluates various scenarios and provides insights into inventory management strategies for deteriorating goods under uncertainty. The findings suggest that incorporating random lead time and demand into inventory decision-making significantly impacts the effectiveness of inventory control policies. Finally, the paper discusses the implications of the model for practical applications in industries dealing with perishable goods, such as food and pharmaceuticals.
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