Inventory model with two stocks

The model the authors present generalizes in a very simplified mode a problem that could arise in such different places as a steel factory and a hydro-electric power plant. They deal with a two stock model. The first one of a constant level (the authors ought to define it), the other one (limited or unlimited) changes according to the random demand. They formulate some necessary conditions for the volume of the first stock and optimal policies which guarantee the minimal expected average cost. An algorithm to determine the optimum decision rule is also presented.