Using the regression analysis tools to manage inventory in the logistics supply

Rate this item
(0 votes)

MAGAZINE №6 (71) December 2015


CATEGORY Optimization and economic-mathematical modeling  Inventory management  Sourcing


Modern business is increasingly interested in the methods, models and approaches of the logistics theory, with the help of which it is possible to find internal reserves in order to provide resource conservation. Primarily, this is due to the fact that the increasing competition level in the goods and service market in Russia and the impact of various types of crisis lead to the gradual limitation of the profit margin. As a result, profitability increase is not about retail margin and sales volume, but about reducing current expenses, associated with the vatious aspects of the company business, including logistics.
Stocks requirement planning (which concerns all logistics function areas at whole and purchasing management in particular) can be considered as the typical example. It is known that overstocks can reduce profit margin because of additional costs, which are the following: storage costs, losses because of immobilization and formation of non-liquid assets (as a consequence of lower turnover). Most companies are faced with a situation where at the same time with an increase in sales volume, profitability is declining. Management decisions which are made periodically do not lead to the desired results. Moreover, they can make situation worse because of incorrectly established links between cause and effect.
In addition, when analyzing the current state of the inventory management system, it is difficult to assess how effectively interact with each other several divisions of the company involved various aspects of logistics activities.

It is possible to identify causes of these phenomena using correlation and regression analysis with the help of which the establishment of indicators interrelation can be made. These indicators reflect the results of company business activities when the interrelation between them is not functional or it is not ordistored by the imposition of indirect and incidental factors.

In order to use correlation and regression analysis successfully, systematic accumulation of statistical data on changes in the various indicators concerning the company stocks is needed. In particular, they are the following: income and sales volume (sending into production for industrial companies), stock balance, etc.

The inflation, the income level of residents, interest rates on bank loans, the cost of advertising, social and demographic structure of society and others can be noted as factors, which have direct or indirect impact on the individual business organizations efficiency. 


Read 2498 times


Postal address:

125 319  Chernуakhovskogo str.16