A multi-product continuous review inventory system in stochastic environment with budget constraint |
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Authors: | Antara Kundu Tripti Chakrabarti |
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Institution: | 1. Department of Applied Mathematics, University of Calcutta, 92, A.P.C. Road, Calcutta, 700009, India
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Abstract: | Common characteristics of inventory systems include uncertain demand and restrictions such as budgetary and storage space
constraints. Several authors have examined budget constrained multi-item stochastic inventory systems controlled by continuous
review policies without considering marginal review shortage costs. Existing models assume that purchasing costs are paid
at the time an order is placed, which is not always the case since in some systems purchasing costs are paid when order arrive.
In the latter case the maximum investment in inventory is random since the inventory level when an order arrives is a random
variable. Hence payment of purchasing costs on delivery yields a stochastic budget constraint for inventory. In this paper
with mixture of back orders and lost sales, we assume that mean and variance of lead time demand are known but their probability
distributions are unknown. After that, we apply the minimax distribution free procedure to find the minimum expected value
of the random objective function with budget constraint. The random budget constraint is transformed to crisp budget constraint
by chance-constraint technique. Finally, the model is illustrated by a numerical example. |
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Keywords: | |
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