An Alternative Procedure for Determining the Optimal Policy for an Inventory Item Having Linear Trend in Demand

Abstract

In this paper we develop an iterative procedure for determining the optimal replenishment policy for an item having linear trend in demand. Shortages are permitted for the inventory item and can be backordered. Our optimal procedure is easier to apply than an earlier solution method reported in inventory literature with linearly time-varying demand and shortages. Two examples are included to illustrate the iterative procedure.

Keywords:

• inventory items
• linear trend in demand
• shortages