A Software Solution to Lost Sales and Back Order Cases of Probabilistic Inventory System
Keywords:
Inventory, Order quantity, Lead time, Back-orders, Lost sales, Expected annual costAbstract
The probabilistic inventory model  studied in this paper  introduces uncertainty in the aspect of lead time and reorder point . It was further considered for back orders and lost sales cases. The lead time and reorder point were described by a normal distribution function for the sake of simplicity. The model led to iterative procedure yet cumbersome to manipulate. Consequently, a simple computer program in Java scripts was designed to achieve the computation. The software was tested on a known problem and a known solution. It returned the exact solution in about a second; and with the values of the reorder point and the order quantity determined by the program, then the estimation of the expected annual cost (EAC) is almost trivial. The difficulty that is associated with the use of the model is thereby reduced. The model can be used to study inventory related problems such as the quantity of meal to be served to the passengers of an aircraft.
References
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