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An Approximation Approach for A Multi-Product Continuous Review Inventory Problem with Budget Constraint  

Lee, Dong-Ju (Dept. of Industrial Systems Engineering Kongju National University)
Yoo, Jae-Wook (R&D Innovation Team, Technology Strategy Office, Corporate Technology Operations, Samsung Electronics)
Lee, Moon-Su (School of Industrial Management Korea University of Technology and Education)
Publication Information
Journal of Korean Society of Industrial and Systems Engineering / v.31, no.4, 2008 , pp. 134-139 More about this Journal
Abstract
Most approaches for continuous review inventory problem need tables for loss function and cumulative standard normal distribution. Furthermore, it is time-consuming to calculate order quantity (Q) and reorder point (r) iteratively until required values are converged. The purpose of this paper is to develop a direct method to get the solution without any tables. We used approximation approaches for loss function and cumulative standard normal distribution. The proposed method can get the solution directly without any iterative procedure for Q, r and without any tables. The performance of the proposed approach is tested by using numerical examples. The budget constraint of this paper assumes that purchasing costs are paid at the time an order is arrived. This constraint can be easily replaced by capacity constraint or budget constraint in which' purchasing costs are paid at the time an order is placed.
Keywords
Continuous Review Inventory Model; Nonlinear Optimization; Supply Chain Management;
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