Method of Calculating Inventory Management Parameters for a Model with a Fixed Interval Between Orders Considering Deficit Costs
MAGAZINE №5(88) October 2018
AUTHORS BELOV L.B.
CATEGORY Inventory management Optimization and mathematical modelling
ABSTRACT
This paper is devoted to the development of formal procedures for calculating inventory management parameters for a model with a fixed interval between orders. The urgency of transition from informal methods of regulation of insurance stocks to formal economically justified procedures for calculating their planned values is shown. The article presents an analysis of the concept of "logistics service" in the context of its use in determining safety stock value. The main approaches to determine the target safety stock value depending on the level of logistics service are considered. Difficulties in determining the dependence of logistics service level and financial performance are widely known. In this regard, it is proposed to use the equation of total costs of replenishment and maintenance of reserves, including deficit costs, as a basis for determining the parameters of inventory management based on cost minimization. In this case, the service level is treated as a derived value that corresponds to the minimum total cost condition. A method for determining the parameters of inventory management for a model with a fixed period is developed. The algorithm of calculations is tested on an example.
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:
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.
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