..

612 INVENTORY MODELS 1141 Inventory Level Inventory Level Time (b) Fig. 12.7. Inventory situation for model 3(a), () RSUD)R> Production is assumed to be instantaneous and lead time negligibly small. The problem is to determine the optimal inventory level 1., where RS LOR>at the beginning of each time interval. The variation of inventory with time for these two cases is shown in Fig. 12.7(a) and (b). When RSL as shown in figure 12.7(a), there are no shortages, when R>I as shown in figure 12.7(b), shortages occur Then the optimal order quantity In, is determined when value of cumulative probability distribution exceeds the ratio cmc, by computing