January  2015, 11(1): 135-144. doi: 10.3934/jimo.2015.11.135

Approximate and exact formulas for the $(Q,r)$ inventory model

1. 

Steven G. Mihaylo College of Business and Economics, California State University-Fullerton, Fullerton, CA 92634, United States

2. 

The Paul Merage School of Business, University of California, Irvine, CA 92697, United States

Received  January 2012 Revised  January 2014 Published  May 2014

In this paper, new results are derived for the $(Q,r)$ stochastic inventory model. We derive approximate formulas for the optimal solution for the particular case of an exponential demand distribution. The approximate solution is within 0.29% of the optimal value. We also derive simple formulas for a Poisson demand distribution. The original expression involves double summation. We simplify the formula and are able to calculate the exact value of the objective function in $O(1)$ time with no need for any summations.
Citation: Zvi Drezner, Carlton Scott. Approximate and exact formulas for the $(Q,r)$ inventory model. Journal of Industrial & Management Optimization, 2015, 11 (1) : 135-144. doi: 10.3934/jimo.2015.11.135
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show all references

References:
[1]

7th printing, Applied Mathematics Series, National Bureau of Standards, Washington, DC., 1968. doi: 10.1119/1.1972842.  Google Scholar

[2]

Management Science, 15 (1969), 453-454. Google Scholar

[3]

Operations Research, 40 (1992), 808-813. doi: 10.1287/opre.40.4.808.  Google Scholar

[4]

Management Science, 44 (1998), 219-233. doi: 10.1287/mnsc.44.2.219.  Google Scholar

[5]

Journal of Industrial and Management Optimization, 7 (2011), 875-890. doi: 10.3934/jimo.2011.7.875.  Google Scholar

[6]

Production and Inventory Management, 13 (1972), 84-86. Google Scholar

[7]

Management Science, 43 (1997), 951-965. Google Scholar

[8]

McGraw-Hill, New York, 2000. Google Scholar

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