Optimization Models for the Continuous Review Inventory System

2017 ◽  
Vol 8 (1) ◽  
pp. 1-21 ◽  
Author(s):  
Barry R. Cobb
Keyword(s):  
Lead Time ◽  
Cost Model ◽  
Mixture Distribution ◽  
Optimal Order ◽  
Lost Sales ◽  
Review System ◽  
Continuous Review ◽  
Demand Distribution ◽  
Correct Model ◽  
Spreadsheet Software

Businesses that carry inventory as a means of responding to customer demand must decide when to place inventory orders and how much to order. A model for selecting an optimal order quantity and reorder point in the continuous review system is implemented in spreadsheet software. Historical data on period demand and lead time is processed by performing a statistical test to select a mixture distribution for lead time demand. This distribution is incorporated into an expected shortage calculation and cost model where shortages incur lost sales and/or goodwill costs. The lead time demand distribution selection is evaluated through experiments. In examples, employing an incorrect distribution leads to expenditures between one and eighteen percent higher than those experienced with the correct model. A mismatch of the backorder or lost sales model with the correct underlying assumptions leads to expenses between four and thirteen percent larger than necessary in an example problem.

scholarly journals ANALISA PENGENDALIAN PERSEDIAAN DAUN KAYU PUTIH YANG OPTIMAL DENGAN METODE CONTINOUS REVIEW SYSTEM DI PT. XYZ

2021 ◽  
Vol 16 (1) ◽  
pp. 106-117
Author(s):  
Enny Aryanny ◽  
Ragil Kusuma Jati
Keyword(s):  
Raw Materials ◽  
Raw Material ◽  
Lost Sales ◽  
Continuous Control ◽  
Review System ◽  
Total Cost ◽  
Continuous Review ◽  
Eucalyptus Oil ◽  
Inventory Costs ◽  
Eucalyptus Leaves

Persediaan adalah sumber daya yang perlu diadakan dan dipelihara untuk menunjang kelancaran produksi. PT. XYZ merupakan perusahaan yang bergerak di proses pembuatan minyak kayu putih. Perusahaan memproduksi minyak kayu putih dimana bahan baku utamanya adalah daun kayu putih. Perusahaan ini memiliki permasalahan dalam melakukan pengendalian persediaan bahan baku daun kayu putih yang disebabkan oleh permintaan minyak kayu putih oleh konsumen yang tidak menentu. Perusahaan mengalami keadaan persediaan yang berlebih yang mengakibatkan tingginya biaya persediaan dan kurangnya persediaan yang mengakibatkan produksi yang tidak memenuhi pesanan. Berdasarkan permasalahan di atas, maka dilakukan pengendalian persediaan dengan metode continuous review system backorder dan lost sales. Tujuan dari penelitian ini adalah melakukan pengendalian persediaan daun kayu putih sehingga dapat meminimumkan biaya persediaan. Metode continuous review system backorder dan lost sales akan dibandingkan dengan metode perusahaan dan dipilih metode terbaik dengan total biaya paling minimum. Hasil dari perhitungan diperoleh total biaya persediaan minimum dengan metode continuous review system backorder sebesar Rp 2.459.692.004, sedangkan metode perusahaan sebesar Rp 2.595.684.800, sehingga mendapatkan penghematan biaya sebesar Rp 135.992.796 dengan efisiensi sebesar 5,2%. Jumlah pemesanan bahan baku per pesan bulan November 2019 – Oktober 2020 sebesar 1.812 ton, dengan total biaya persedian bahan baku sebesar Rp 2.544.762.825.   Kata Kunci: Continuous, Pengendalian, Persediaan.   ABSTRACT Inventories are resources that need to be procured and maintained to support the continuity production. PT. XYZ is a company engaged in the process of making eucalyptus oil. The company produces eucalyptus oil where the main raw material is eucalyptus leaves. This company has problems in controlling the supply of raw materials of eucalyptus leaves caused by the erratic demand of eucalyptus oil by consumers. The company experiences a state of excess inventory which results in high inventory costs and lack of inventory resulting in production that does not fulfill orders. Based on the above problems, inventory control is carried out using the continuous review system backorder and lost sales method. The purpose of this study is to control the inventory of eucalyptus leaves so as to minimize inventory costs. The continuous review system backorder and lost sales method will be compared with the company method and the best method is chosen with the minimum total cost. The results of the calculation obtained the minimum total inventory cost with the continuous review system backorder method of Rp.2,459,692,004, while the company's method of Rp2,595,684,800, so as to get a cost savings of Rp.135,992,796 with an efficiency of 5.2%. The number of raw material orders per message in November 2019 - October 2020 amounted to 1,812 tons, with a total cost of supplying raw materials amounting to Rp 2,544,762,825.   Keywords: Continuous, Control, Inventory.

scholarly journals Mathematical Model of (R,Q) Inventory Policy under Limited Storage Space for Continuous and Periodic Review Policies with Backlog and Lost Sales

2017 ◽  
Vol 2017 ◽  
pp. 1-9 ◽  
Author(s):  
Kanokwan Singha ◽  
Jirachai Buddhakulsomsiri ◽  
Parthana Parthanadee
Keyword(s):  
Lead Time ◽  
Empirical Distribution ◽  
Problem Instance ◽  
Lost Sales ◽  
Storage Space ◽  
Optimal Solutions ◽  
Periodic Review ◽  
Continuous Review ◽  
Mathematical Expressions ◽  
Space Capacity

This paper involves developing new mathematical expressions to find reorder point and order quantity for inventory management policies that explicitly consider storage space capacity. Both continuous and periodic reviews, as well as backlogged and lost demand during stockout, are considered. With storage space capacity, when on-hand inventory exceeds the capacity, the over-ordering cost of storage at an external warehouse is charged on a per-unit-period basis. The objective is to minimize the total cost, consisting of ordering, shortage, holding, and over-ordering costs. Demand and lead time are stochastic and discrete in nature. Demand during varying lead time is modeled using an empirical distribution so that the findings are not subject to assumptions of demand and lead time probability distributions. Due to the complexity of the developed mathematical expressions, the problems are solved using an iterative method. The method is tested with problem instances that use real data from industry. Optimal solutions of the problem instance are determined by performing exhaustive search. The proposed method can effectively find optimal solutions for continuous review policies and near optimal solutions for periodic review policies. Fundamental insights about the inventory policies are reported from a comparison between continuous review and periodic review solutions, as well as a comparison between backlog and lost sales cases.

scholarly journals An integrated supply chain inventory model with imperfect-quality items, controllable lead time and distribution-free demand

2013 ◽  
Vol 23 (1) ◽  
pp. 87-109 ◽  
Author(s):  
Hsien-Jen Lin
Keyword(s):  
Lead Time ◽  
Optimal Order ◽  
Total System ◽  
Screening Process ◽  
Defective Items ◽  
Distribution Free ◽  
System Cost ◽  
Demand Distribution ◽  
Production Run ◽  
Distribution Free Approach

In this paper, we consider an integrated vendor-buyer inventory policy for a continuous review model with a random number of defective items and screening process gradually at a fixed screening rate in buyer?s arriving order lot. We assume that shortages are allowed and partially backlogged on the buyer?s side, and that the lead time demand distribution is unknown, except its first two moments. The objective is to apply the minmax distribution free approach to determine the optimal order quantity, reorder point, lead time and the number of lots delivered in one production run simultaneously so that the expected total system cost is minimized. Numerical experiments along with sensitivity analysis were performed to illustrate the effects of parameters on the decision and the total system cost.

Stochastic Periodic-Review Models with Duration- and Quantity-Dependent Inventory Costs: Properties and Approximations

2016 ◽  
Vol 33 (04) ◽  
pp. 1650030 ◽  
Author(s):  
Tal Avinadav
Keyword(s):  
Lead Time ◽  
Deterministic Model ◽  
Normal Approximation ◽  
Optimal Order ◽  
Periodic Review ◽  
Inventory Cost ◽  
Inventory Costs ◽  
Demand Distribution ◽  
Advantages And Disadvantages ◽  
Periodic Review Inventory

In this paper, we formulate a stochastic periodic-review inventory model with lead-time that considers both duration- and quantity-dependent inventory costs, and show that the optimality equation has the same format as the standard newsvendor problem with a modified demand distribution. We suggest (i) an approximation of the optimal order-up-to level, based on discretization of the inventory cost accounting, and (ii) two heuristic formulas, based on the two-moment normal approximation of the modified demand distribution, and on an approximated deterministic model. We evaluate the performances of these formulas using a Brownian motion demand process under different scenarios, and discuss their advantages and disadvantages.

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