(s, S) Continuous Review Models for Products with Fixed Lifetimes

• Published in: Operations research Vol. 47; no. 1; pp. 150 - 158
• Main Authors: Liu, Liming, Lian, Zhaotong
• Format: Journal Article
• Language: English
• Published: Linthicum, MD INFORMS 01.01.1999; Operations Research Society of America; Institute for Operations Research and the Management Sciences
• Subjects: Applied sciences; Carrying costs; continuous review; Cost efficiency; Cost functions; Critical numbers; Exact sciences and technology; Inventories; inventory/production; Markov processes; Markov renewal; Mathematical independent variables; Modeling; Operational research and scientific management; Operational research. Management science; perishable; Perishables; Scheduling, sequencing; Unit costs; Measurement; Markov process; Lifetime; System performance; Replenishment; Renewal process; Cost function; Probability distribution; Level; Optimization; Stock
• ISSN: 0030-364X; 1526-5463
• DOI: 10.1287/opre.47.1.150

We analyze an ( s , S ) continuous review perishable inventory system with a general renewal demand process and instantaneous replenishments. Though continuous review systems seem more amenable to optimization analysis than do periodic review systems, the existing literature addressing this type of model is rather limited. This limitation motivated us to seek greater understanding of this important class of inventory models. Using a Markov renewal approach, we obtain closed-form solutions for the steady state probability distribution of the inventory level and system performance measures. We then construct a closed-form expected cost function. Useful analytical properties for the cost function are identified and extensive computations are conducted to examine the impact of different parameters. The numerical results illustrate the system behavior and lead to managerial insights into controlling such inventory systems.