Optimizing routine inventory reorder quantity

Inventory replacement is not always dealt in a scientific context. The undesirable economic consequences of such an attitude can be more noticeable in large non-profit organizations that maintain a wide variety of items in inventory. However, where a stabilized variety of inventory items is combined with predetermined prices, standardized procedures, built on optimizing theory, may prove worth-while, experimenting with towards greater economies. The technique presented in this paper can be utilized to make routine recorder quantity optimum, yet simple to practice through a chart, by personnel unfamiliar with the mathematics of optimization. Once the corresponding chart is constructed in each organization, it can by used on a routine basis for determining order quantity as long as certain cost parameters hold stable.