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A continuous review (Q, r) model with owned and rented storage facilities

In this paper we propose an approximate solution to the inventory stochastic continuous review (Q, r) problem with two storage facilities, an owned warehouse (OW) and a rented warehouse (RW). We show that the reorder point obtained from the (Q, r) model with two warehouses is smaller than the one generated from the unconstrained classical continuous review model and larger than the one derived from the single warehouse model with a storage space constraint. We additionally present other structural properties of the optimal ordering policy with two storage facilities and provide numerical examples to illustrate the models.