Uncertainties in supply disruptions and returns make it extremely hard to control a firm s inventory. However,the traditional approach is found quite difficult to develop a model due to many stochastic factors in the system, therefore supply disruptions and returns are dealt with separately. In order to analyze their effects on the firm s inventory comprehensively, under the condition that the inventory level process is expressed as a Brownian motion(BM), an expected total discounted cost model is establish...
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