An optimal allocation problem of storage capacity for two products

This paper deals with the production-inventory model where two products are to be stored. Storage capacity is fixed. To allocate the total available storage space optimally between the two products (produced in random quantities) in such a way that the total expected effective profit is maximized. Both the cases of deterministic demand and random demand have been studied here. The cases where (i)productions have no relation with the storage capacity, and (ii)the expected production of the items are equal to their respective storage space, have been discussed.