{"id":4818,"date":"2025-05-10T11:06:05","date_gmt":"2025-05-10T05:36:05","guid":{"rendered":"https:\/\/study.madeeasy.in\/?p=4818"},"modified":"2025-07-18T15:32:37","modified_gmt":"2025-07-18T10:02:37","slug":"inventory-models","status":"publish","type":"post","link":"https:\/\/www.madeeasy.in\/study\/me\/industrial-engineering\/inventory-models","title":{"rendered":"Inventory Models"},"content":{"rendered":"<p style=\"text-align: justify;\">Economic lot size of an item depends on the following:<\/p>\n<ol style=\"list-style-type: lower-roman;\">\n<li style=\"text-align: justify;\">Possibility of placing repeat orders.<\/li>\n<li style=\"text-align: justify;\">Nature of demand<\/li>\n<li style=\"text-align: justify;\">Availability of discount<\/li>\n<li style=\"text-align: justify;\">Single or multiple product manufacturer.<\/li>\n<\/ol>\n<h2 style=\"text-align: justify;\">Inventory models considering the above can be classified as under:<\/h2>\n<p style=\"text-align: justify;\"><strong> A. Static Inventory Models:<\/strong> It is applicable in case where only one order can be placed to meet the demand. Repeat orders are either impossible or too expensive. Typical examples of items under this group are: perishable goods like bread, vegetables etc., seasonal products like coolers, umbrellas, crackers, sweaters, rain coats etc.<\/p>\n<p style=\"text-align: justify;\"><strong>B. Dynamic Inventory Models:<\/strong> It is applicable for items where repeat orders can be placed to replenish stock. Dynamic inventory models can be classified as:<\/p>\n<ul style=\"text-align: justify;\">\n<li>Deterministic models.<\/li>\n<li>Probabilistic models.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong> C. Deterministic Models:<\/strong> These are based on the assumption that the demand as well as lead time of an item are deterministic (i.e., known with certainty). Further, these models may be classified as:<\/p>\n<ol style=\"list-style-type: lower-roman;\">\n<li style=\"text-align: justify;\">Single product (item) inventory models.<\/li>\n<li style=\"text-align: justify;\">Multi product inventory models.<\/li>\n<\/ol>\n<p style=\"text-align: justify;\">The single product deterministic inventory models may be classified as:<\/p>\n<p style=\"text-align: justify;\"><strong> (a) Deterministic inventory models with no shortages:<\/strong><\/p>\n<ul>\n<li style=\"text-align: justify;\">Inventory models with uniform demand.<\/li>\n<li style=\"text-align: justify;\">Inventory models with several production runs of unequal length.<\/li>\n<li style=\"text-align: justify;\">Inventory models with finite replenishment (Production).<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong> (b) Inventory models with shortages:<\/strong><\/p>\n<ul>\n<li style=\"text-align: justify;\">Inventory models with instantaneous production and variable order cycle.<\/li>\n<li style=\"text-align: justify;\">Inventory models with instantaneous production and fixed order cycle.<\/li>\n<li style=\"text-align: justify;\">Inventory models with finite replenishment (Production).<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong> (c) Inventory models when quantity discount is allowed:<\/strong><\/p>\n<ul>\n<li style=\"text-align: justify;\">With one price break.<\/li>\n<li style=\"text-align: justify;\">More than one price break.<\/li>\n<\/ul>\n<h3 style=\"text-align: justify;\"><strong> Assumptions in Deterministic Models:<\/strong><\/h3>\n<p style=\"text-align: justify;\">The following assumptions are made in deterministic models:<\/p>\n<ul>\n<li style=\"text-align: justify;\">The demand of an item is known exactly for a given period.<\/li>\n<li style=\"text-align: justify;\">The demand of an item occurs uniformly over a period of time.<\/li>\n<li style=\"text-align: justify;\">The cost of placing an order is fixed and does not vary with the lot size. Similarly, set up costs are also constant.<\/li>\n<li style=\"text-align: justify;\">The inventory carrying charges are directly proportional to the order quantity.<\/li>\n<li style=\"text-align: justify;\">The price per unit is fixed and is independent of the order size (in case of fixed price inventory models).<\/li>\n<li style=\"text-align: justify;\">Orders are received instantaneously (Replenishment is instantaneous).<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><a class=\"btn btn-danger\" role=\"button\" href=\"https:\/\/study.madeeasy.in\/me\/industrial-engineering\/classification-of-inventories\/\" target=\"_blank\" rel=\"noopener\">&lt;&lt; Previous<\/a> | <a class=\"btn btn-success\" role=\"button\" href=\"https:\/\/study.madeeasy.in\/me\/industrial-engineering\/costs-associated-with-inventories\/\" target=\"_blank\" rel=\"noopener\">Next &gt;&gt;<\/a><br \/>\n<strong> Must Read: <\/strong> <a href=\"https:\/\/study.madeeasy.in\/me\/industrial-engineering\/costs-associated-with-inventories\/\" target=\"_blank\" rel=\"noopener\"><strong>What is Industrial Engineering?<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Economic lot size of an item depends on the following: Possibility of placing repeat orders. Nature of demand Availability of<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1505,10],"tags":[1522,1521,1520],"class_list":["post-4818","post","type-post","status-publish","format-standard","hentry","category-industrial-engineering","category-me","tag-deterministic-models","tag-dynamic-inventory-models","tag-static-inventory-models"],"_links":{"self":[{"href":"https:\/\/www.madeeasy.in\/study\/wp-json\/wp\/v2\/posts\/4818","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.madeeasy.in\/study\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.madeeasy.in\/study\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.madeeasy.in\/study\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.madeeasy.in\/study\/wp-json\/wp\/v2\/comments?post=4818"}],"version-history":[{"count":0,"href":"https:\/\/www.madeeasy.in\/study\/wp-json\/wp\/v2\/posts\/4818\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.madeeasy.in\/study\/wp-json\/wp\/v2\/media?parent=4818"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.madeeasy.in\/study\/wp-json\/wp\/v2\/categories?post=4818"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.madeeasy.in\/study\/wp-json\/wp\/v2\/tags?post=4818"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}