Optimal Reorder Periods for an Inventory System with Variable Costs of Ordering

This paper discusses an inventory system in which the cost per order varies and is dependent on the number of different items listed on the order. The problem is to determine how frequently orders should be initiated and how many different items should be listed on the orders so as to minimize the sum of the costs of carrying inventories and the costs of ordering. An area for application of this study is discussed and models are developed for various ordering policies. Examples are given and the costs associated with each of these policies are compared.