Technical Paper An Improved Fixed Order‐Interval Model

Optimal decision rules are presented for determining both the best stock‐up level and the best time to receive an order in a fixed order‐interval inventory system under certainty. In developing such rules, an important, but heretofore neglected, factor is taken explicitly into account, namely, the portion of the period during which no sales can occur. It is shown that unless the system is restocked at just the right time, the firm's actual cost per period may be many times higher than the minimum possible.