No label defined (Q4953799)

This paper is one of a series of essays in Honour of Franz Ferschl's 70th Birthday. The authors derived that when two customers compete for obtaining an item and the demands are stochastic the best solution is that an independent entrepreneur takes care of the inventory. The item is assumed to be purchased by the same supplier. Defining \(TC_i\) as the expected relevant cost the authors used the cost advantage formula \(TC_A+TC_B-TC_A+B\) for characterising the economical usefulness of maintaining separate inventories. The calculus may be developed by using an iterative procedure [\textit{R. J. Tersine}, Principles of inventory and materials management. North-Holland (1988)] or a heuristic proposed in the paper. The role of the standard deviation and the correlation coefficient is studied. A numerical example is worked out with illustrative porpoises. For the entire collection see [Zbl 0930.00096].