Three-Leveled Model For Integrate Inventory Management in Supply Chains
MAGAZINE №2 (97) April 2020
AUTHORS ASLAKHANOV A.R., GERAMI V.D.
CATEGORY Inventory management Optimization and mathematical modelling Supply chain management
ABSTRACT
In the theory of inventory management, various models of inventory management are widely known. All of them are based on two fundamental factors: order size and the time between two adjacent deliveries. The variety of additional conditions (discounts depending on the size of the delivery lot, penalties due to deficits, the volume of safety stock, etc.) make the task of developing a working model to minimize total costs extremely difficult. It is another factor that looks interesting - the multi-level structure of reserves allocation.
In (Aslakhanov A.R., 2017; Lukinskiy V.V., Aslakhanov A.R., 2017), an integrated inventory management model was developed that would take into account deficit costs, randomness of demand and logistics cycles duration, as well as a predetermined planned level of end-user service. The model was developed for cases of two-level supply chains, which is a serious limitation for applying the model in practice.
In this paper, the model will be expanded for the case of a three-level linear supply chains in order to assess the scalability potential of the developed model for business situations and to assess the possibility of using the developed model in conjunction with reinforcement learning methods.
Keywords: inventory management Economic order quantity safety stock supply chain management total logistics costs
EOQ Working Capital Profitability Considering the Delay of Cash Flows and Storage Renting
MAGAZINE №4(87) August 2018
AUTHORS SHIDLOVSKIY I. G.
CATEGORY Inventory management Optimization and mathematical modelling
ABSTRACT
Optimization procedures of modern supply chains often require the consideration of a number of special factors that must reflect simulated cash flows so that the solutions found meet academic requirements in inventory management. The article evaluates the profitability of deliveries for the modified EOQ-model, in the format of which it will be possible to envisage the impact of the following factors. 1) The previously agreed possibility of deferring payment for an order. 2) The concept of the time value of money in the analysis of the cash flows of the simulated supply chain. 3) For incoming payments it is necessary to take into account that the proceeds from the sold goods will arrive with a predetermined delay (from the moment of its realization time). 4) The payment of storage costs is realized in the form of leasing the corresponding places in the warehouse, and with a delay for a specified time in relation to the middle of the reordering interval (in contrast to the traditional theory positions in the format of classical EOQ-models of inventory management).
In the case of such models, the existence of an estimate for the cost-effectiveness of the cash flows of the simulated supply chain will make it possible to use the new modified EOQ formulas taking into account the abovementioned factors. This will allow to optimize the reserves taking into account the time value of money in accordance with the requirements of financial analysis and financial mathematics. The research was carried out in relation to important for business situations of efficient supply, when the specified deferrals for payment of an order allow you to pay it out of the proceeds at the re-order intervals. Therefore, in order to simulate such processes, a necessary and sufficient condition has also been established in the paper, that must be imposed on the duration of such a delay in order to ensure the possibility of the specified payment of the order from the proceeds. The modification of such conditions is presented if, during optimization, it is necessary to take into account the need for payments from the revenue for payment of storage costs, as well as the required additional deductions related to maintaining the business processes. The features of supply optimization procedures are illustrated on the basis of numerical simulation results.
Keywords:
EOQ-formula Modification at Storage Renting with Account to Payment Delays
MAGAZINE №2(85) April 2018
AUTHORS
CATEGORY Optimization and mathematical modelling Inventory management
ABSTRACT
The article presents a special modification of the EOQ-formula for a diversified EOQ-model of inventory management with account to specifics of lot deliveries. It will allow managers to determine the optimal parameters of the inventory management strategy if it is required to take into account the following features: 1) the possibility of order payment deferral; 2) time value of money at cashflow modelling 3) incomes specifics, when the proceeds come with a delay 4) specificity of storage costs payment (in form of rent or by the occupied storage space). In addition, the article specifies some options related to the possibility of using such a formula if it is necessary to additionally take into account: a) the restriction on the allowable length of the delay in payment of goods, so that the point of receipt of the proceeds did not exceed the corresponding reorder interval duration (on average); b) the vehicle capacity. The presented research materials on optimization of supplies will allow managers to estimate the effect of permissible delays in order payments, delays in receipt of proceeds, and the factor of vehicle capacity on the parameters of the optimal strategy of inventory management. The procedures of EOQ formula modification for inventory management systems are performed in relation to interesting and business-relevant models of this type that correspond to efficient deliveries, where these delays allow to make order payments from revenue at reordering intervals.
Keywords:
Development approaches to Systematization and Impact Assessment of the Variety of Stock-Out Models
MAGAZINE №6 (83) December 2017
AUTHORS LUKINSKIY V.V., MAYEVSKIY A.G.
CATEGORY Optimization and mathematical modelling Inventory management
ABSTRACT
The article deals with some aspects of systematization and classification of various inventory management models with an account for stock-out. The model with "loss of requisition " most rarely encountered in the theory of inventory management, but indisputably relevant because of its practical value, is discussed. The urgency of the stock-out problem in the modern world economy is accounted for by the information given in the article about the losses caused by the stock-out. Applying analytical approach when solving the stock-out problem can serve as a tool that will help solve long-standing problems of stock-out costs reduction. In this paper the calculation examples for key variants of stock-out models are given, and, the model with "lost demand" and its connection with a static problem is of particular interest. Calculation results comparison revealed the fundamental difference in models, which allowed to avoid mixing models that is often encountered in the literature. The result obtained during the research is the expansion of the approach to classification, and consequently, the opportunity to attract additional tools of the stock management theory to solve the stock-out problem, which ultimately aims at optimizing total logistics costs.
Keywords:
The Development of VMI-Relationships Between Mining Companies and Providers of Operating Resources
MAGAZINE №3 (80) June 2017
AUTHOR ELYASHEVICH I.P.
CATEGORY Industrial companies’ corporate logistics Inventory management Modern concepts and technologies in logistics and SCM
ABSTRACT
For mining enterprises, the need for spare parts and consumables used in the repair and operation of equipment depends on a number of factors. The influence degree of each of them is not unambiguous and has more probabilistic (stochastic) nature. Therefore, the equipment manufacturers’ recommendations, which are present in the technical documentation, are more general (universal) in nature. In circumstances where it is not possible to determine the actual need for operating resources unambiguously, mining companies are forced to form additional insurance stocks which are necessary to ensure an uninterrupted production process and maintain productivity at a given level. To reduce the negative impact of uncertainty of the environment, it is advisable to build relationships with suppliers based on VMI technology. The calculations were made taking into account the total costs associated with the organization of orders and supplies from suppliers and consumers. The proposed solutions were based on using the model of the optimal order size in supply chain, taking into account losses, both from immobilization of financial resources diverted to inventories, and from downtime of technological equipment. In the article the list of items of expenses that should be taken into account when calculating the total costs associated with purchases and stocks of operating resources of mining companies is proposed. As a result of calculations, it is shown that with the development of VMI relations between mining companies and their suppliers, it is possible to achieve a mutual cost reduction, while reducing inventory levels, by increasing transparency and certainty when planning the demand.
Keywords:
Specifics of Spare Parts Replenishment Parameters Definition for Processing Plant
MAGAZINE №3 (80) June 2017
AUTHOR KRASNOSHCHEKOV A.G.
CATEGORY Industrial companies’ corporate logistics Inventory management Optimization and mathematical modelling
ABSTRACT
Modern methods of inventory management had been formed, implemented and fine-tuned within industries that work directly to consumer, such as retail and FMCG. Those industries are innovation leaders in the sphere of supply chain management. Industrial large-equipment companies, especially in natural resources and processing industries as usual are catching-up and adopting practices of leading industries. A key element of inventory management process is method of definition of replenishment parameters such as safety stock, reorder point, lot size. Applying those proved methods, which are well known within retail companies, requires special customization driven by specifics of industrial facilities. The article describes a method that has been developed for spare parts replenishment of equipment maintenance of a processing plant. Implementation of the method allowed to reduce stock level by 22%
Keywords:
Inventory Management Strategies for Integrated Multileveled Systems
MAGAZINE №3 (80) June 2017
AUTHORS
ASLAKHANOV A.R. - Department of Management, National Research University Higher School of Economics (St. Petersburg, Russia)
CATEGORY Inventory management Optimization and mathematical modelling Supply chain management
ABSTRACT
The great variety of inventory management models is known in inventory management theory. All of them are divided into two groups: first group is based on the optimal amount of order and the other is based on the fixed time between adjacent deliveries. Existing models are appropriate for the situations with determined demand per day and delivery time while in practice these two key parameters are variables and change in accordance with the certain law of distribution. Also, existing models do not usually take into account the variety of conditions, that exist in practice and effects the performance of supply chain, namely: discounts in dependence with order amount, product shelf life, amount of safety stocks on SC different levels, penalties for the deficit ant etc. The most interesting condition is the multilevel structure of stocks placement. It requires to take into account existence of not only focus companies inventories but also, for example, raw material and manufacturer packaging inventories, finished goods inventories at the distributorsэ warehouses and inventories of other levels of SC during the optimization of the total logistical costs of the supply chain. Special conditions mentioned above makes the objective of making practically applicable mathematical model for the total logistics costs of the SC optimization extremely hard to solve. The EOQ model is the most known one. Despite its popularity it has several crucial implementation conditions: determinate values of demand and length of logistic cycles; safety stock existence on different levels of supply chain and deficit costs are ignored; model considers local optimization – EOQ minimizes total logistics costs of given level of SC. Formulas for the two main inventory management strategies were found: based on the fixed order amount and based on the period between adjacent deliveries.
Keywords:
Optimization Models for Determination of Characteristics for Multi-Item Inventory Control System within Industrial Enterprise
MAGAZINE №3 (80) June 2017
AUTHORS
LEVENTSOV V.A. - Cand. of Ec.Sc., Associate professor, Director, Graduate School of Industrial Management and Economics, Peter the Great Saint-Petersburg Polytechnic University (St. Petersburg, Russia)
KOBZEV V.V. - Doctor of Ec.Sc., Professor, Graduate School of Industrial Management and Economics, Peter the Great Saint-Petersburg Polytechnic University (St. Petersburg, Russia)
CATEGORY Inventory management Optimization and mathematical modelling
ABSTRACT
Urgency of the research is connected with the modern conditions of domestic industrial enterprises’ functioning process. Particularly, we are talking about complex structure of corresponding supply networks and processed material flows, increasing competition between enterprises as a result of goods market’s globalization, considerable share of logistic costs in production price, etc. Above-mentioned conditions determined appropriateness of definition for the problem concerning determination of characteristics for multi-item inventory control system which defines effectiveness of functioning for corresponding warehouse capacities. In the initial stages of the research the analysis of scientific works concerning research area has been performed, corresponding results have become the basis for the conclusion about limitation of existing tools for real-world inventory problems’ solving. During the next stage of the research basic optimization model for determination of characteristics for multi-item inventory control system has been created. The model describes situation when goods are dispatched with variable intensity described by uniform probabilistic distribution and are accepted as batches with certain size. At the next research stage mentioned model has been modified for taking into account the opportunity of ordering batches with variable size to make corresponding multi-item inventory control system more flexible. The distinctive feature of created models concerns two parameters being used in proposed inventory control system – minimal and maximal reorder points. Minimal reorder point defines the moment of batch ordering for certain inventory item, maximal reorder point is used for estimation of appropriateness for batch ordering for additional inventory items towards above-mentioned item being replenished on the basis of minimal reorder point. During the next stage of the research created optimization models have been realized in a practical example with application of «Solver» add-in of «Microsoft Excel» software. The results of models’ realization confirmed high practical importance of the tools created during the research.
Keywords:
The Methods for Estimation of Losses Caused by Flowing Capital Immobilization in Mining Companies’ Operational Resources Inventory
MAGAZINE №2 (79) April 2017
AUTHOR ELYASHEVICH I.P.
CATEGORY Industrial companies’ corporate logistics Inventory management Optimization and mathematical modelling
ABSTRACT
By controlling the various stock categories in real business, companies often have to take into account the large number of factors. It is necessary in order to provide these factors received as a result of parameters calculation, really make it possible to reduce costs and increase profits effectively. One such model involves the immobilization of accounting losses from the funds invested in stocks. Mining companies are the initial parts of the supply chain, which are the sources of origin of the material resources main flow. Material costs represent a significant share in the costs of raw materials produced, and most of them accounted for the purchase of consumables used in the production process. Therefore, operating resources require diverting significant amounts of funds from the mining companies turnover. Calculations were made taking into account various factors, reflecting the macroeconomic trends in Russian economy, such as inflation. To assess the opportunity costs, the statistics on bank deposits with fixed interest rates and interest capitalization was used. The potential savings evaluation was carried out using the economic order quantity model taking into account losses from the immobilization of capital into stocks. As a result of the calculations presented in the article, it is shown that taking into account losses from the capital immobilization into stocks and developing practical recommendations for optimizing the level of stock balance, may give significant cost savings and opportunities to increase profits. Released financial resources can be directed to the equipment modernization, which will help increase the return on assets and improve the productivity of mining companies work.
Keywords:
The Economic Order Quantity Model: Estimation of Stability and Accuracy
MAGAZINE №1 (78) February 2017
AUTHORS
TCHIROUKHIN V.A. - Cand.of Eng. Sc., Associate Professor, Department of Supply Chain Management National Research University Higher School of Economics (St. Petersburg, Russia)
CATEGORY Analytics and reviews Inventory management Optimization and mathematical modelling
ABSTRACT
The problem of the inventory management modern theory development is relevant and one of the priority directions of development of economic science to reduce logistics costs in the supply chain and to improve their efficiency.
The article deals with the model of economic order quantity (EOQ) and its place in the inventory management theory; the model base and corrected version which allows differing the accounting of costs related to the current stock storage have been analyzed; the approach for the assessment of the stability of EOQ model,
reflecting the deviation of total logistics costs of their optimal value depending on changes in the value of the order quantity have been proposed.
The accuracy of economic order quantity calculation dependson many factors: how many components of the costs are taken into account and their relationship, what version of the model is selected, but primarily on the accuracy of the parameters included in it; to evaluate the accuracy of the economic order quantity calculation
and, consequently, the total costs derived formulas to determine themean values and standard deviations of these values based on the linearization of distribution functions of random arguments; for approval of the proposed dependencies the calculations examples have been done; the possible directions of EOQ model further research have been generalized. In particular, there is need for a reasonable complexity of the model, its differentiation, without which it is impossible to bring the analytical dependences for practical applications.
Keywords:
