A Comparison of Two Inventory Models
Published Date: July 1, 1985
Two inventory models are compared in this paper. The first model solves for the optimal purchase of all inventory items simultaneously. The second model solves for the optimal purchase of each inventory item considered one at a time, using a penalty parameter that is chosen to satisfy an availability goal. It is shown that the solutions of the two models are not equivalent. Moreover, the second model is too sensitive to changes in the relative demand rate but not sensitive enough to changes in relative holding costs. Supersedes 05 850765.10
