Multi-Item EOQ Inventory Model With Constraints, Under Stochastic Demand
Keywords:
Dynamic Programming, Inventory Management, Optimization, EOQ, Markov chain, Stochastic Process, Linear Programming, Multi-itemAbstract
This paper considers an inventory system of constrained multi-item Economic Order Quantity (EOQ) model under a periodic review inventory system with stochastic demand. The objective is to determine in each period of the planning horizon, an optimal EOQ so that the long run profits are maximized for a given state of demands for the multiple items. The decision of whether to order additional units of items or not to order is made at the beginning of each period using 2-period dynamic programming technique. The Linear programming technique is used to incorporate and handle the constraints. A numerical example is given to illustrate the application of the model.