Inventory control : models and methods

Abstract

Inventory control is a major field in OR.Interest in the problems of optimal stock management at a scientific level goes back to the start of the 20th century.The most important impulse, however, came after the 2nd World War when scientists of the caliber of Jacob, Marschak, Kenneth Arrow, Samuel Karlin among others looked into the problem of optimal stocking under stochastic demand.It was characteristic of this discipline, that methods of solving problems of this type were developed first before the necessary commercial electronic data processing for their ready application were available.The importance of inventory control in business increased dramatically with the increasing interest rates of the 70s.It was the rule of the hour to release surplus operating capital tied up in excessive inventories and to use the resulting liquidity to finance new investments.There arose a need for intelligent solutions to the problem.Unfortunately, OR experts and software applications developers were following separate paths.Hence, the opportunity to find the best solutions, using the combined potentials of theory, problem analysis and experience, was not exploited.Today, we stand before the development and realization of sophisticated CIM concepts and it is imperative to reset the course.This book is a contribution to this effort.It shows how inventory control, with the help of OR, can be rationally structured.It is understandable that a complete treatment of this vast material is not possible and it is not intended.The book limits itself to standard models and the important ramifications.Special emphasis is given to fundamentals.On one hand, the reader is shown how the models are appropriately formulated and extended for special problems.On the other hand, the needed mathematical derivations are completely and comprehensively described so that, using the methods learned, the reader will be able to work out his own models not treated in this book.Numerical methods for solving problems with random demand in complicated cases were given emphasis in this book.The important algorithms are thoroughly treated so that special situations can be handled. VIThe book is intended for OR practitioners and economists, as well as for information managers who are engaged in the development of modern computerized inventory systems, working for corporations, software houses or computer manufacturers.

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