Continuous review inventory control when capacity is variable

Yunzeng Wang, Yigal Gerchak*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


Many complex production/inventory systems are characterized by uncertain capacities due to unexpected breakdowns, unplanned repairs, etc. We analyze the effects of variable capacity on optimal lot sizing in continuous review environments. Two models are considered: the basic EOQ model and the order quantity/reorder point model with backlogging. For both cases, we obtain the optimality conditions for generally distributed variable capacity; we then show that the optimal order quantities for both models, and the optimal reorder point for the second one, are greater than those without variable capacity. When the variable capacity distribution is exponential, we develop effective procedures for finding the optimal solutions.

Original languageEnglish
Pages (from-to)381-388
Number of pages8
JournalInternational Journal of Production Economics
Issue number1-3
StatePublished - 1 Aug 1996
Externally publishedYes


  • Continuous review
  • Inventory control
  • Variable capacity


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