Consideration of purchase dependence in inventory management
This paper emphasizes the importance of identifying and considering 'purchase dependence,' which is when the purchase of an item is dependent on the availability of the other items demanded in the same order. Even though purchase dependence is an important factor in designing an inventory replenishment policy, it has remained mostly unaddressed. Purchase dependence is different to demand dependence. Purchase dependence deals with the purchase behavior of customers, whereas demand dependence deals with the correlation among demands. This paper is the first to develop inventory models for purchase-dependent inventory systems. Through simulation experiments, this paper demonstrates that the developed inventory models, which include purchase dependence, incur less inventory operations costs (and satisfy more service level constraints) than other inventory models. (C) 2013 Elsevier Ltd. All rights reserved.
purchase dependence demand dependence inventory model correlated demand