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A Comparison of the Mathematical Modeling Methods in the Inventory Systems under Uncertain Conditions

Author(s): A. Mirzazadeh

Journal: International Journal of Engineering Science and Technology
ISSN 0975-5462

Volume: 3;
Issue: 8;
Start page: 6131;
Date: 2011;
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Keywords: Inventory | Inflation | Stochastic | discounted cost | average annual cost.

The inventory models, generally, are derived with considering two methods: (1) minimizing the average annual cost or (2) minimizing the discounted cost. This paper compares the optimal ordering policies determined by these methods under uncertain inflationary situations. The inventory and shortages behavior have been analyzed with using the differential equations. The numerical examples are used to illustrate the theoretical results. A detailed analysis on the models parameters has been performed and some management insights are presented. The results show that there is a negligible difference between two procedures for wide range values of the parameters.
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