Determination Of Optimal Inventory Level Using Suitable Inventory Models

Abstract

To find the ideal inventory level, appropriate models for a variety of real-world systems are built in inventory control.  This work analyzes a novel kind of inventory model that makes use of the so-called Setting the Clock Back of Zero (SCBZ) characteristic. There are two machines M₁ and M₂  in series and the output of M₁ is the input of M₂. Hence a reserve inventory between M₁ and M₂ is maintained. The method of obtaining the optimal size of reserve inventory , assuming cost of excess inventory, cost of shortage and when the rate of consumption of M₂  is a constant, has already been attempted.  In this paper, it is assumed that the repair time of M₁  is a random variable and the distribution of the same undergoes a parametric change after a truncation point X₀ , which is taken to be a random variable.  The optimal size of the reserve inventory is obtained under the above said assumption. Numerical illustration also provided.