A NEW INVENTORY STRATEGY SUBJECTED TO PEAK IN MARKET DEMAND, QUANTITY DISCOUNT AND- FINITE RANGE STOCHASTIC LEAD TIME

Abstract

This thesis work presents a heuristic algorithm for determining order quantities for multiple items given all-unit discounts and single constraint (warehouse capacity). We consider the problem of stocking the inventories of multiple items that shares the common resource, like a warehouse space, where the vendor of the items offer quantity discounts. Here the time between order replenishment for all the item is the same and a fixed cycle approach is used to heuristically solve the quantity discount case. A common assumption which the researcher have made until now is that the demand and the lead time are deterministic and if there requires any crushing of the lead time then it is linear. Through this work we extend the previous work by considering the lead time as one of the variable affecting the Economic Order Quantity EOQ and at the same time we are considering it to be of a finite range. What ever is the peak in the market demand during the planning horizon is considered to minimize the back orders and the crushing cost of the lead time is considered to exponentially behaving. Numerical result is presented for a case where the lead time follows a normal distribution. Finally software is being made as the solution is too difficult to be carried out manually.