Abstract
This paper considers two stochastic inventory models with different service rates under (s, Q) policy. Customers arrive according to a Poisson process and they enter into a buffer of finite capacity. Service time follows an exponential distribution and when the inventory level falls to s, service is given at a reduced rate. An orbit of infinite capacity is provided to the customers when the buffer is full. The orbiting customers may retry for service. The lead time and inter retrial times are exponentially distributed. Matrix Analytic Method is used to analyze the models. Various performance measures and a cost function are derived. Comparison of two models is done graphically. Optimum (s, Q) pair is calculated for the most profitable model.
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