A Two-Product Inventory Model with a Joint Ordering Policy

Abstract EN

Inventory is one of the most visible and tangible aspects of doing business.

This is the reason why most problems of a business often end up in inventory.

Most inventory studies focus on a single type of product or item such that optimality decisions are arrived at for that single product.

In this study, we create a scenario where two types of products are considered in such a way that there exists a joint ordering policy.

A continuous review inventory model was developed but ended up with a single period review model for simplicity reasons.

We tried to exhaust all main cost elements and fed them into the model in addition to investigating the possible limitations that may constrain the whole decision making process.

Six constraints were found and a mathematical programming model was developed.

We further went on to prove that the mathematical inventory-programming model developed minimises the total inventory cost in such a scenario.