A Method for Determining Inventory Policy Parameters for a Single Product under Limited Space
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Abstract
This study involves a method for determining parameters for a (R, Q) inventory policy for a single product under limited storage space. Most previous research developed
methods for finding optimal reorder point (R) and order quantity (Q) that minimizes total cost including holding cost, ordering cost and shortage cost. This study incorporates limitation of storage space by adding the cost of overstocking to the total cost. A method to find appropriate values of these parameters is proposed for the case where a single product is subject to uncertain demand and lead time limited storage space capacity. A numerical example based on real product data is used to demonstrate effectiveness of the method.
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