An inventory control model with stochastic review interval and special sale offer

Periodic review inventory models are widely used in practice, especially for inventory systems in which many different items are purchased from the same supplier. However, most of periodic review models have assumed a fixed length of the review periods. In practice, it is possible that the review periods are of a random (stochastic) length. This paper presents an inventory control model in the case of random review intervals and special sale offer from the supplier. The replenishment interval is assumed to obey from two different distributions, namely, exponential and uniform distributions. Also, shortages are allowed in the term of partial backordering. For this model, its convexity condition is discussed and closed form solutions are proposed.

► We study an inventory control model with random review and replenishment intervals. ► The replenishment intervals are taken from exponential and uniform distributions. ► In this model the supplier offer a temporary price reduction to his customer. ► Shortages are allowed in the term of partial backordering. ► The convexity conditions are discussed and closed form solutions are proposed.