Operating Characteristics for an Inventory Model that Special Handles Extreme Value Demand

Abstract

In this report, we extend the results shown in Technical Report 19 by adding a set-up cost to the infinite horizon inventory model that special handles any demand that exceeds some value tau. We generate 2268 cases and present the operating characteristics of the special handling model as compared to the operating characteristics without special handling. We show that in 99.5% of the cases special handling reduces the total expected costs (excluding special handling costs). Most of the cost reduction is as a result of decreased inventory investment with a smaller proportion due to decreased penalty costs and decreased set-up costs. In many cases the reduction in inventory investment significantly exceeds the amount of orders left unfilled due to special handling.

Open PDF

Document Details

Document Type
Technical Report
Publication Date
Jan 01, 1983
Accession Number
ADA123495

Entities

People

  • Douglas Blazer

Organizations

  • University of North Carolina at Chapel Hill

Tags

Communities of Interest

  • Energy and Power Technologies

DTIC Thesaurus Topics

  • Business Administration
  • Commerce
  • Cost Reductions
  • Experimental Design
  • Information Science
  • Inventory
  • Inventory Control
  • Investments
  • Lead Time
  • North Carolina
  • Operations Research
  • Probability
  • Random Variables
  • Schools
  • Standards
  • Systems Analysis
  • Universities

Readers

  • Logistics and Supply Chain Management.
  • Systems Analysis and Design