Economic Lot Size Models with Varying Demands

Abstract

Our analysis of inventory models so far has focused on situations where demand was both known in advance and constant over time. We now relax this latter assumption and turn our attention to systems where demand is known in advance yet varies with time. This is possible, for example, if orders have been placed in advance, or contracts have been signed specifying deliveries for the next few months. In this case, a planning horizon is defined as those periods where demand is known. Our objective is to identify optimal inventory policies for single-item models as well as heuristics for the multi-item case. We also present extensions to single-item models with price-dependent demand.