The relationship between decision variables and penalty cost parameter in (Q, R) inventory models

✍ Scribed by Alan J. Kaplan

• Publisher: John Wiley and Sons
• Year: 1970
• Tongue: English
• Weight: 314 KB
• Volume: 17
• Category: Article
• ISSN: 0894-069X
• DOI: 10.1002/nav.3800170212

✦ Synopsis

Abstract

This paper is concerned with the optimum decision variables found using order quantity, reorder point (Q, R) inventory models. It examines whether the optimum variables (Q* and R*) are necessarily monotonic functions of the backorder cost parameter (or equivalently of the performance objective). For a general class of models it is proved that R* must increase as the performance objective is raised, and an inequality condition is derived which governs how Q* will change. Probability distributions of lead time demand are cited or found for which Q* increases, Q* decreases, and Q* is independent of increases in performance objectives or backorder cost parameter.