THE DETERMINATION OF OPTIMAL PARTIAL FILL POLICY FOR AN INVENTORY SYSTEM WITH LUMPY DEMAND ITEMS

This paper presents a mathematical model developed for the synthesis o f optimal replenishment policies for items that experience lumpy deman ds. In order to avoid disrupting the inventory system, a cutoff point of w units is introduced such that the system would only satisfy routi nely customer orders with transaction sizes less than or equal to w un its. For customer orders with transaction sizes larger than w units, t he system would only supply the cutoff amount (w units). The excess un its would be refused. The control discipline is the (s,S) inventory po licy with continuous review, and the nature of the customer orders is approximated by a discrete stuttering Poisson distribution. The optima l values of the control parameters, w, s and S, are determined. The th eoretical results obtained are illustrated with a numerical example.