Comparison of Periodic Review Inventory Models under Poisson Demand Distribution

This study deals with single step single-item inventory models under Poisson demand distribution. Inventory control is based on periodic review. At the beginning of the period, decision maker has to decide about inventory replenishment. In the first model, decision maker gives order up to the replenishment point in each period regardless of inventory level. In the second model, decision maker reviews the inventory level at the beginning of the period and gives order only when inventory level is equal or under reorder point. The demand during the period is stochastic and fits to Poisson distribution. The demand structure is analyzed as a Markov modulated demand. So, the inventory control model is formulated as a stochastic decision process. In this model, the penalty cost and the order cost are taken into account, and there is no backlogging. However, holding cost is very low, and therefore ignored in this study. Long-term average costs according two periodic review models are compared based on data of raw material demand taken from an international polyurethane firm

Keywords:

Inventory control, periodic review, Markov Poisson distribution,

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