AN AGGREGATE STOCKAGE POLICY FOR EOQ ITEMS AT BASE LEVEL
RAND CORP SANTA MONICA CA
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The report describes a mathematical model for determining optimal operating rules for control of an inventory system comprising a large number of Economic Order Quantity EOQ items. The model accepts two types of information as inputs item data, consisting of unit price, past demand, and resupply time and system data, consisting of future base activity level, variance to mean ratio of demand distribution, and constraints on the average backorder rate and order frequency per year. Based on these inputs, the model computes a reorder point and order quantity for each item in the system. Constraints on the backorder rate and order frequency can be varied within the relevant range of the base operations and the corresponding minimum-cost policies derived. Alternative efficient policies can thus be presented to the base supply manager instead of a single policy and he can choose the one most appropriate for his operating conditions.
- Operations Research
- Logistics, Military Facilities and Supplies