An optimal inventory solution for Weibull demand distributions

Abstract The problem considered here is an infinite stage inventory decision process in which the penalty cost for failing to have in stock sufficient items to satisfy demand at the next stage includes a fixed administrative cost (red tape) and a cost proportional to the deficiency in stock. It is shown here that when the demand follows a Weibull distribution, optimal constant stock level solution exists. A simple computer program is given to calculate this optimal solution.