Optimal replenishment and stocking strategy for inventory mechanism with step-shaped demand

This talk considers the inventory mechanism with step-shaped demand, that is, the infinite planning horizon consists of two stages wherein the demand rate in the first stage differs from that in the second stage. For this mechanism, to minimize the retailer's inventory cost, we establish an optimization inventory decision model. On the basis of the inventory cost analysis, we present a closed-form solution to the model and provide an optimal replenishment and stocking strategy to the retailer. As a by-product of the obtained results, we present a counterintuitive fact that the economic ordering quantity may not necessarily be optimal for this inventory system. The given numerical experiments shows the validity of the model.