Sinusoidal Functions for Inventory Control Models

Abstract

Inventory models are mathematical formulations developed to find an optimal inventory policy that will permit rational decisions concerning the order point and the order quantity. The order point is a function of the lead time, while the order quantity is a function of the expected demand. Nonetheless, the main uncontrollable variable is the expected demand. If demand is known with certainty and the lead time is fixed, then there will be no risk to face and decisions made to optimize the inventory control system will be perfect under these highly hypothetical assumptions. On the other hand, if demand is known with certainty while the lead time may vary, then the only risk involved will be the depletion of the safety stock, if, and only if, the lead time is longer than expected. However, as long as the safety stock is not entirely depleted, there is no real threat of considering the cost of shortage to be included in the inventory model.