Minimax policies for a two-location/ two-product inventory system

Abstract

This paper deals with a one period, single-item-twolocation/ two-product inventory distribution problem. A function called the maximum inventory cost, is defined and its expected value is used to derive minimax lot-sizing policies. The resulting policies are shown to avoid shortages as much as possible. Exponential and uniform demand distributions are discussed.

Keywords:

• Newspaper boy Model
• demand distribution
• maximum inventory cost
• probability of shortage