Title: Threshold inventory rationing policy for multiple customer demand classes

Authors: Vinod Kumar Mishra, Lal Sahab Singh

Addresses: Department of Computer Science and Engineering, Kumaon Engineering College, Dwarahat, Almora 263653, Uttarakhand, India. ' Department of Mathematics and Statistics, Dr.Ram Manohar Lohia Avadh University, Faizabad 224001, Uttar Pradesh, India

Abstract: In this paper, we consider an inventory rationing policy for multiple customer demand classes with unique arrival rates under continuous review environment. The scheme is characterised by a set of monotone threshold inventory levels, which gives the indications when to reserve stock for higher priority customer classes. The proposed inventory policy serves all customers on a first come first serve (FCFS) basis until the on-hand inventory is above the threshold levels, and cut-off the services of the lower priority customers when on-hand inventory falls below the threshold level of the customer class. The threshold rationing policy studied here can be proposed as a way to avoid the problems inherent in the roundup policy while still taking the advantage of inventory pooling. First we analyse this static policy under a special threshold clearing mechanism to fill the backlog, and then to calculate the policy parameter we develop an efficient algorithms.

Keywords: inventory rationing; threshold inventory; rationing policy; multiple customer classes; customer demand; continuous review.

DOI: 10.1504/IJOR.2011.042507

International Journal of Operational Research, 2011 Vol.12 No.2, pp.223 - 239

Published online: 14 Feb 2015 *

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