SUMMARY
In this paper an EOQ model is developed especially for a production environment where the inventory to be controlled is raw material. The fundamental difference between this model and others is that a stochastic demand is placed upon the inventory in terms of the time for an individual to consume one unit of inventory rather than the number of units consumed in some time interval. A shortage cost for inventory is imposed via the idle machine (man) cost. The optimal re-order quantity is determined as a function of the stockout probability and the optimal stockout probability is obtained via a one-dimensional search, over some prescribed set of feasible stockout probabilities.