A Continuous Review of (S — s) Inventory Systems in which Depletion is Due to Demand and Failure of Units

A stochastic model for an inventory system in which depletion of stock takes place due to random demand as well as random failure of items is studied under the assumption that the intervals between successive unit demands, as well as those between successive unit failures, are independently and identically distributed random variables having negative exponential distribution with different parameters. The transient and steady state probability distributions of the stock level are derived and the optimum decision rules in the long run given.