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Journal of Statistics Applications & Probability Letters
An International Journal


Volumes > Vol. 2 > No. 3


Substitutable Inventory Systems with Coordinated Reorder Levels

PP: 221-234
N. Anbazhagan, Mark Goh, Vigneshwaran,
This paper considers a continuous review inventory system of two substitutable commodities with storage capacity Si for commodity i (i =1; 2). Demands for commodity i is assumed to form a Poisson process. When the inventory level of one commodity reaches zero, then any demand for this commodity will be satisfi ed by the item of the other commodity. The reorder level is xed as si - k, k = 0, 1, ...r, for commodity i. At a demand epoch an order for Si - si + k is placed when both inventory levels are less than or equal to their respective reorder levels si - k with probability pk. The limiting probability distribution for the joint inventory levels is computed. Various operational characteristics and the expression for the long run total expected cost rate are derived.

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