Safety Levels in Military Inventory Management

A suitable objective function is derived for inventory problems involving stocks of several commodities with interdependent optimal stock levels. To this end the effect of inventory levels on the activities served by the inventory is derived, and the expected utility of these activities is used as the objective function, to be maximized by choice of stock levels. In the case of several activities jointly served, where it may be difficult to choose a joint utility function for these activities, the proposal is made and argued to approximate this function by the sum of the marginal costs of the separate activities.