Inventory Management For Stochastic Demand And Lead Time Products
Inventory management is one of many revenue management techniques which focuses on balancing between the customer demand and supply. Inventory management plays a vital role in reducing the stocking cost while preparing enough products to guarantee the customers’ satisfaction. This paper presents one of many inventory management strategies to deal with an uncertain behavior of various important factors, stochastic demand and lead time. Search algorithm and a simulation are used in order to determine the optimal reorder point (ROP*) according to important parameterse.g., the demand, lead time of products, and the minimum order quantity (MOQ).The search method in this paper is decrease the search space by half in every round. The result shows the company can reduce the reorder point for about 20-30%, but likely stay the same for the service level.
Keywords: Inventory Management, Reorder Point, Stochastic Demand, Stochastic Lead Time.