A periodic review decision model for an inventory system with two demand types (Q2073529)

Summary: This paper presents a decision model for finding the best policy in a single item inventory system incorporating two kinds of demand, in which each demand type is modelled as an independent compound Poisson process. Some critical model assumptions are infinite planning horizon, infinite replenishment rate, zero lead time, and shortage backorder. A periodic review inventory model is utilised, in which decision variables of the optimisation problem considered in the model are replenishment period and maximum inventory after replenishment. After the mathematical model is developed, optimal decision variables can be obtained.