Dynamic inventory rationing for systems with multiple demand classes and general demand processes

Abstract

We consider the dynamic rationing problem for inventory systems with multiple demand classes and general demand processes. We assume that backorders are allowed. Our aim is to find the threshold values for this dynamic rationing policy. For single period systems, dynamic critical level policy is developed and the detailed cost approximation subject to this policy is derived. For multiperiod systems, a dynamic rationing policy with periodic review is proposed. The numerical study shows that our dynamic critical level policies are close to being optimal for various parameter settings. © 2010 Elsevier B.V. All rights reserved.