An operating policy in inventory systems with random leadtimes and unit demands

Abstract

Herein, we propose an inventory system with two ordering levels. The intervals between successive demands are independently and identically distributed random variables. The demands are assumed to occur for one unit at a time and no backlogging of demands is permitted. The leadtimes occurring at two levels are assumed to follow different general distributions. The probability mass function is explicitly derived for various stock levels. The expected value of the total cost and cumulative profit are also provided. The steady state behaviour of the stock level is extracted from the general formulae.