Stochastic Models with Continuous Review
We already encountered in §23 an inventory model with continuous review. A Poisson demand was assumed. It was shown that under this special assumption the optimal order quantity D is the same as that in the deterministic model with a constant demand rate. D was obtained using the Wilson formula. The interpretation of the objective function C in the stochastic sense led to the method of state probabilities.
KeywordsStochastic Model Inventory Model Delivery Time Inventory Level Order Quantity
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