An Inventory Control Policy of the (Q, S, R) Type for Manufacturing Industries: Simulation Analysis Approach

Abstract

This paper discusses the design and use of a simulation model for finding the “optimal” values of the parameters of an inventory policy of the (Q,S,R) type, where Q is the constant size of replenishment orders, S is the reorder level, and R, the upper limit indicator for backlogged demand. Three types of customers, identified as totally-impatient, impatient and patient, depending on the length of time they can tolerate to wait for the fulfillment of their orders of random sizes, arrive at the outlet of a company according to Poisson processes of different densities. The “impatience” of customers is thus imbedded in the simulation model developed.