A JELS Stochastic inventory model with random demand

Abstract

A stochastic joint lot size model has been developed in which demand ofthe customer and the stock level of the vendor are assumed to be identicallydistributed continuous random variables. The effective ways for a compromisebetween the vendor and the customer at a common lot size with certain amountof price adjustments are determined and the methodology is explained througha numerical example.Key words: Inventory control programming, Stochastic models, Truncated normaldistribution, Joint economic lot size.