Dynamic discrete simulation model of an inventory control with or without allowed shortages

Abstract

This paper shows how to develop a dynamic discrete spreadsheet model of an inventory control in the case of the fixed order quantity, for the finite time horizon, with or without allowed shortages. There is a clear distinction between a discrete controlled object (the law of behavior and control domain), a performance criterion and the method used to find an optimal solution. Further, it shows how to derive a performance criterion, including all costs that are considered to be significant by the user. Several respectful papers pertaining inventory control with and without shortages are used to compare and prove accuracy, simplicity and practicality of our approach.