Inventory control as a discrete system control for the fixed-order quantity system

This paper shows how to model a problem to find optimal number of replenishments in the fixed-order quantity system as a basic problem of optimal control of the discrete system. The decision environment is deterministic and the time horizon is finite. A discrete system consists of the law of dynamics, control domain and performance criterion. It is primarily a Simulation model of the inventory dynamics, but the performance criterion enables various order strategies to be compared. The dynamics of state variables depends oil the inflow and outflow rates. This paper explicitly defines flow regulators for the four patterns of the inventory: discrete inflow - continuous/discrete outflow and continuous inflow - continuous/discrete Outflow. It has been discussed how to use suggested model for variants of the fixed-order quantity system as the scenarios of the model. To find the optimal process, the simulation-based optimization is used. (C) 2009 Elsevier Inc. All rights reserved.