Abstract

The aim of the present paper is to construct a decision making index for inventory management system based on demand and lead-time distributions. The proposed index utilizes the joint distribution of demand per unit lead-time. For the statistical application, the probability density function of the above distribution has also been derived. Here the distributions of demand and lead-time are taken to be exponential and gamma respectively. The numerical value of the proposed index lies between 0 and 1. The magnitude of the index indicates the degree of satisfaction or dissatisfaction etc. of customers with the system. The suggested index can be used in taking decisions for better services and also to maintain equilibrium between the inventory and demand of the customers. The application of the proposed index has been illustrated with the help of numerical example.

Author: Meenakshi Srivastava and Ranjana Gupta

Received on: July, 2006

Accepted on: