Spreadsheet Modeling of (math formula) Inventory Policies


  • The author is grateful for valuable comments from two anonymous reviewers and the associate editor which substantially improved the teaching brief.


This teaching brief describes a method for finding an approximately optimal combination of order quantity and reorder point in a continuous review inventory model using a discrete expected shortage calculation. The technique is an alternative to a model where expected shortage is calculated by integration, and can allow students who have not had a calculus-based statistics course to better understand how uncertainty affects inventory decisions.