ON THE SINGLE RESOURCE CAPACITY PROBLEM FOR MULTIITEM INVENTORY SYSTEMS

In this paper, we study multi-item inventory systems under a single resource capacity constraint. In contrast to most previous approaches, we treat the capacity as a decision variable, and not as given data. This is consistent with many practical cases where additional capacities/resources can be acquired/rented at some cost/profit. Two solution procedures are developed for deriving an optimal policy within the class of policies that has a fixed cycle for all items with phasing of orders within the cycle. These solution procedures can be applied to various types of cost functions, as illustrated by an example.