On should remember that the supplier(s) may plan to place an order on a regular/fixed interval or random interval of time for additional replenishment of stock on hand. Added to that there is one other important concept known as lead time, , which denotes the time taken for the goods to be delivered from the time they have been ordered. The next important set of facts which are impotant for the reader to understand are the different variables which effect the inventory system, different decision making functions which are important while planning the inventory system, different metrics which are used for analyzing the manufacturing/inventory/supply chain system, etc. Hence before discussing the mathematical models let us highlight the important points which are essemtial for an in-depth understanding of the inventory system one has at hand and they are :

Product(s)/Good(s) to be produced : We consider goods being manufactured may be similar or of different varities. Moreover products can be complementary or supplementary such that the production schedule or the plan of production for different goods can be planned accordingly. On the other extreme the production schedules can be totally different for dissimilar products and goods.

Decision variables : These may include the amount to be produced/ordered and in general is a function of the current inventory position. Other factors affecting or factors which must be taken into consideration when deciding this important decision variables are pricing, sequencing and scheduling of jobs, sequencing of delivery dates, inspection schedule, policies for inspection, capacity of production, specific set-up requirements, quality standards to be maintained for the goods being manufactured, wages and costs being incurred for manufacturing the goods, machine run time and time of production, maintenance schedule, etc.

Structure of decision problem : In general the objective to be optimized can be a single valued, like cost or may be multi-valued like cost, production quantity, run time of production, etc. The motivation of having the right structure for the decision problem, is to have the optimal order amount being placed at the right time (may be discrete or continuous) so that the inventory level may be reviewed optimally.

Demand : In general the demand (which can be discrete or continuous) of goods which is placed by the buyer on to the supplier may be based on trends of past demand. Forecasting methodologies are used to understand these trends. Else, it may be based on some thumb rule for which no scientific rationale may exist. In general it is seen that the demand of one period is dependent on the demand of previous time periods. Moreover demand of one product may be inter related to the demand of other existing produced which are being supplied along with the first product, Hence the forecasting techniques which are to be used should be sophisticated enough to capture these intricacies to the maximum possible extent.