Abstract: Considering the difficulty in obtaining the accurate parameter values in the inventory models, this paper provides a two-stage ordering strategy for one kind of inventory system, where the demand rate depends on the inventory level. By constructing a dynamic order quantity and analyzing its related properties, this two-stage order strategy realizes the estimation of critical value for control parameter, and finally obtains the optimal order quantity. Moreover, this two-stage ordering strategy not only draws on the simple mathematical form of the classic EOQ model, but also does not require the retailer to know the exact model parameter values in advance. Theoretical analysis and numerical simulation demonstrate the feasibility of this strategy. Sensitivity analysis further provides the impact of the estimation error of the control parameter critical value on the effectiveness of this strategy, and the results show that this two-stage ordering strategy is robust to the misestimation of critical value for control parameter.

Key words: inventory management, unknown parameter value, stock-dependent demand rate, adaptive EOQ