OPTIMAL FINISHED GOODS INVENTORY POLICY FOR A FIRM,
Abstract
A study is made of the production and inventory system of a small industrial firm. A mathematical model is developed to describe the relationship between average levels of finished goods inventory of each of fifty different products and corresponding levels of customer service. Customer service is measured by the percentage of orders that are back-ordered more than a specified length of time. The objective is minimization of total expected cost of carrying inventory for a specified level of customer service. The model includes the factors of limited production capacity, rate of production, variable demand, the cost of carrying inventory, and waiting time duration of backorders. The behavior of the inventory control system is simulated by means of a computer and conclusions are drawn on the basis of the results of that simulation. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 1965
- Accession Number
- AD0612645
Entities
People
- Kenneth Goudreau
Organizations
- Case Western Reserve University