Optimal last stock of substitutive service parts

This paper focuses on the last stock problem of substitutive service parts, which is a hot problem in practice. Considering that a firm faces two types of service parts with a certain substitution coefficient, we study the optimization problem of minimizing the total expected cost. Using the non-linear programming theory and method, we find the optimal preserved quantities for the optimization problem. The relation between the product substitution characteristic and the total cost of service parts is analyzed. And an example is given to show the application of our model.