SINGLE - PERIOD MODEL

Single–Period Inventory Model

A system for ordering items that have little or no
value at the end of a sales period (perishables).

Two Marginal Costs:

C֧= Cost of Shortage (underestimated )C˳ = Cost of Overage ( overestimated )
= Sales price per unit
– Cost per unit = Cost per unit– Salvage value per unit
FIXED – PERIOD (P) SYSTEMS

Perpetual Fixed-period (P)

Fixed
-quantity (Q)
Inventory System System
System
A system that keeps A system in which
An ordering system with
track of each inventory orders are
the sale order amount
withdrawal or addition made at regular time
each time.
to inventory intervals.
continuously, so records are
always current.
Fixed-period (P) System
Also called a periodic review or P system.

Assumptions of Fixed-period System:

1. The only relevant costs are the ordering and holding
costs.
2. Lead times are known and constant.
3. Items are independent of one another.