Multi-product EOQ model with multivariate Markov demand

We consider an optimality of ordering quantity for the multi-product inventory system under the situation with multivariate Markov demand. In order to forecast the multiple demands in the inventory system, we propose a new forecasting model with multivariate Markov chains in which the demands are state-dependent, here we name the new model as multivariate Markov demand model (MMDM), and the relationships between demands are mined through the MMDM. Furthermore, a new multi-product inventory system is established by using the MMDM, and the solution of the model is proposed. The numerical example show that MMDM is an effective method for forecasting multiple demands in the inventory system, and the EOQ model with multivariate Markov demand is a feasible approach for optimizing ordering quantity in the multi-product inventory system. © 2017, UK Simulation Society. All rights reserved.