Two commodity coordinated inventory system with Markovian demand

Two commodity coordinated inventory system with Markovian demand

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Article ID: iaor20073191
Country: Singapore
Volume: 23
Issue: 4
Start Page Number: 497
End Page Number: 508
Publication Date: Dec 2006
Journal: Asia-Pacific Journal of Operational Research
Authors: , ,
Abstract:

This paper considers a two commodity continuous review inventory system. The demand points for each commodity are assumed to form Poisson processes. It is further assumed that the demand for the first commodity requires one unit of the second commodity in addition to the first commodity with probability p1. Similarly, the demand for the second commodity requires one unit of the first commodity in addition to the second commodity with probability p2. This assumption models the situation in which a buyer who intends to buy one particular commodity may also go for another commodity. The limiting probability distribution for the joint inventory levels is computed. Various operational characteristics, expression for the long run total expected cost rate is derived. The results are illusrated with numerical examples.

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