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Inventory management of multiple items with irregular demand: A case study by George Nenes; Sofia Panagiotidou; George Tagaras is a Engineering article available to read on EtoBox.

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We present the case of a Greek commercial enterprise facing the problem of managing the inventories of thousands of different items, supplied by more than 20 European and Asian manufacturers and sold to a large number of different-type customers. A key feature of the problem is that the demand for the vast majority of items is intermittent and lumpy, thus not allowing the use of the usual normal or Poisson distributions. The paper describes the solutions given to several practical problems in the course of developing an easy-to-use yet effective and all-encompassing inventory control system. Emphasis is placed on the accurate modeling of demand by means of a gamma distribution with a probability mass at zero or a package Poisson distribution for very-slow-moving items. Using those models and simple quantitative tools we develop an efficient procedure for approximate but quite accurate determination of the base stock levels that achieve the desired fill rates in the proposed periodic review system. We briefly describe the computerized implementation of the new system and the very encouraging results.

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Author

George Nenes; Sofia Panagiotidou; George Tagaras

Publisher

Elsevier Science; Elsevier ; Elsevier BV (ISSN 0377-2217)

Published

2010

Language

EN

Field

Engineering (Physical Sciences)