Document Type

Article

Publication Date

2011

Publication Title

International Journal of Inventory Research

Volume

1

Issue

3

First Page

221

Last Page

247

DOI

10.1504/IJIR.2011.045383

Keywords

inventory management, product returns, disposals, stochasticmodels, level-crossing theory

Abstract

We consider a replenishment control system in which product returns play an important role in inventory planning. We focus on the inventory of an individual item that is stored at a single location to meet a constant demand over time. We assume that the total amount of returns accumulated over a period of time can be represented by a compound Poisson process. We further assume that opportunities for inventory disposals or relocation arise occasionally in accordance with a Poisson process. We not only seek to resolve the issues of when to order and how much to order, we also consider the question of when to dispose of excess inventory and by how much. Inventory reductions occur when the opportunity for a disposal arises and the inventory position is deemed too high. After each disposal the inventory position is restored to a specified base-stock level. We develop a cost model of this system and highlight its properties through an extensive numerical study.

Comments

The article available for download here is a post-print. The definitive version is published in the Internation Jounral of Inventory Research, 2011, vol.1 iss. 3. Copyright, Inderscience Publishers.

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