The Dynamic Programming Models for Inventory Control System with Time-varying Demand

Abstract

The concept of dependent and independent demand is important in planning and replenishment inventory that also requires different inventory control solutions. This paper employs the dynamic programming technique for inventory control system with time varying demand to propose the replenishment policy in terms of the economic order quantity, number of replenishment, and reorder point where total inventory cost is minimized. The study result indicates that the dynamic programming models outperform the traditional lot sizing models in term of total inventory cost. Moreover, the paper creates opportunities for extending further researches on dynamic inventory related to uncertainty conditions of demand, yield, lead time, and capacity constraints.