Inventory theory

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Inventory theory (or more formally the mathematical theory of inventory and production) is the sub-specialty within operations research that is concerned with the design of production/inventory systems to minimize costs. It studies the decisions faced by firms and the military in connection with manufacturing, warehousing, supply chains, spare part allocation and so on; it provides the mathematical foundation for logistics.

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Current university courses in inventory theory typically use one or more of the following textbooks:

  • Axsaeter, Sven. Inventory Control. Norwell, MA: Kluwer, 2000. ISBN 0-387-33250-2
  • Porteus, Evan L. Foundations of Stochastic Inventory Theory. Stanford, CA: Stanford University Press, 2002. ISBN 0-8047-4399-1
  • Silver, Edward A., David F. Pyke, and Rein Peterson. Inventory Management and Production Planning and Scheduling, 3rd ed. Hoboken, NJ: Wiley, 1998. ISBN 0-471-11947-4
  • Simchi-Levi, David, Xin Chen, and Julien Bramel. The Logic of Logistics: Theory, Algorithms, and Applications for Logistics Management, 2nd ed. New York: Springer Verlag, 2004. ISBN 0-387-22199-9
  • Tempelmeier, Horst. Inventory Management in Supply Networks, 3rd. Edition, Norderstedt (Books on Demand) 2011, ISBN 3-8423-4677-8
  • Zipkin, Paul H. Foundations of Inventory Management. Boston: McGraw Hill, 2000. ISBN 0-256-11379-3


  • Kenneth J. Arrow, Samuel Karlin, and Herbert E. Scarf: Studies in the Mathematical Theory of Inventory and Production, Stanford University Press, 1958