On exhibiting inventory systems with Erlangian lifetimes under renewal demands (Q917415)

A continuous review (s,S) inventory model with renewal demand is discussed with an additional complication that one item is used as an exhibiting piece with Erlang lifetime distribution. By identifying a suitable embedded Markov renewal process, expressions for the transient and limiting values of the inventory level distribution, as well as mean reorder rate, are obtained. The limiting inventory level distribution proves to be independent of the initial state and uniform. After that it is very simple to derive optimal values for the (s,S)-policy parameters. The solution for a dual model with arbitrary distribution of lifetimes and an Erlangian distribution of demand intervals is also given.