Simulation of Queueing System
Simulation of Queueing System
Notice that in the second cycle, the amount in inventory drops below
zero, indicating a shortage.
Two way to avoid shortages
Carrying stock in inventory
: cost - the interest paid on the funds borrowed to buy the items, renting
of storage space, hiring guards, and so on.
Making more frequent reviews, and consequently, more frequent
purchases or replenishments
: the ordering cost
The total cost of an inventory system is the measure of performance.
The decision maker can control the maximum inventory level, M, and the
length of the cycle, N.
In an (M,N) inventory system, the events that may occur are: the demand
for items in the inventory, the review of the inventory position, and the
receipt of an order at the end of each review period.
Simulation of Inventory Systems (3)