A “Variable s” Inventory Model

This paper develops a linear periodic review inventory model in which the reorder rule is an extension of the “order up to S” or (S, T) policy where S varies as a general linear function of demand and net inventory. Stationary and non-stationary demand processes are considered. Lead time is assumed to be an integral multiple of the review period and, at most, an independent and identically distributed random variable. Analysis of the model includes stability, transient response, steady-state response, and the effects of common nonlinearities.