Inventory Models
We now examine a variety of inventory models and the costs associated with them.
Independent vs. Dependent Demand
Inventory control models assume that demand for an item is either independent of or dependent on the demand for other items. For example, the demand for refrigerators is independent of the demand for toaster ovens. However, the demand for toaster oven components is dependent on the requirements of toaster ovens.
This chapter focuses on managing inventory where demand is independent. Chapter 14 presents dependent demand management.
Holding, Ordering, and Setup Costs
Holding costs are the costs associated with holding or “carrying” inventory over time. Therefore, ...
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