Dynamic inventory targets revisited

Dynamic inventory targets revisited

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Article ID: iaor20001954
Country: United Kingdom
Volume: 50
Issue: 7
Start Page Number: 697
End Page Number: 703
Publication Date: Jul 1999
Journal: Journal of the Operational Research Society
Authors:
Keywords: forecasting: applications
Abstract:

This paper is about periodic review inventory systems which are controlled by replenishing the inventory up to a target level which is set based on a demand forecast generated from past demands. It is shown that the replenishments will fluctuate more than final demand. Furthermore the effectiveness of a given safety stock is significantly reduced, indeed even with a very high target the maximum achievable service level can be quite limited. The paper is based on an actual spare parts inventory control system used in a domestic appliance company.

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