Cost analysis of an (S?1,S) inventory system with two demand classes and rationing
In this paper we analyze a continuous review, lost sales (S?1,S) inventory system with two demand classeshigh priority and low priority. We compare two different policiesone where the two classes of customers are treated exactly alike and the other where a threshold rationing policy is used. We prove that under certain conditions there is a sub-optimal rationing policy which yields a lower cost for the supplier and higher service levels for both the high priority and low priority customers than the optimal policy where the two customers are treated alike.
inventory rationing markov chain stochastic processes multiple classes ofcustomers cost comparison