MAXIMUM ISSUE QUANTITY PROBLEM FOR INVENTORY SYSTEMS WHEN DEMAND IS LUMPY

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 maximum issue quantity restriction is introduced such that customer demands with si zes equal to or exceeding w units will be filtered out of the inventor y system and satisfied by placing a special replenishment order to a h igher echelon. Customer demands with sizes less than w units will be m et from stock. The control discipline is the (s, S) inventory policy w ith continuous review and the nature of the demands is approximated by a discrete compound Poisson distribution. The optimal values of the c ontrol parameters, s and S, are determined. The theoretical results ob tained are illustrated with a numerical example.