A classical inventory model amendment based on management accounting

From the perspective of management accounting, there exists a mistake for decades in the classical inventory model in mainstream textbooks such as “Operations Research” published by Tsinghua University Press. The reason of the model mistake is clearly expounded. The cost of a commodity unsold is the “inventory asset” of the commodity unsold. After a commodity was sold out the “inventory asset” of the commodity is converted into the expense of CGS which is the abbreviation of “Cost of Goods Sold”. The reason of the model mistake is to count all the initial ordering cost of goods ordered as the initial ordering expense in the model derivation process. Moreover this paper deduces the modified model of inventory management strategy for stochastic demand, and presents different model solutions of a same inventory management case for contrast. The contrast of the same case´s different conclusions according to the original model in the textbook and according to the modified model in this paper, made it very clear that the modified model conforms to the objective economic reality, therefore it is correct.