A mathematical safety stock model for DDMRP inventory replenishment

DOI10.1155/2019/6496309MaRDI QIDQ2298669zbMATH OpenOpenAlexFDO

Authors Chan-Ju Lee, Suk-Chul Rim

Publication date 20 February 2020

Published in Mathematical Problems in Engineering (Search for Journal in Brave)

Copyright license Creative Commons Attribution 4.0 International

Full work available at URL https://doi.org/10.1155/2019/6496309

Mathematics Subject Classification ID

Inventory, storage, reservoirs (90B05)

Review text

Summary: The inventory replenishment method of the demand-driven materials requirement planning (DDMRP) draws attention from both scholars and practitioners due to its lower average inventory and, simultaneously, lower stockout rate than existing methods. However, the safety stock of DDMRP replenishment uses a subjective guideline, which is different from any existing safety stock formula. The guideline allows the user to subjectively select the parameter values within a certain range, which jeopardizes the consistency of the inventory performance. This paper proposes an alternative safety stock formula for DDMRP replenishment, which is mathematically defined so as to be consistent. Moreover, simulation indicates that the proposed formula outperforms the DDMRP guidelines and existing safety stock formulas in terms of average inventory and stockout rate.

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Cites work

• A heuristic methodology for order distribution in a demand driven collaborative supply chain
• scientific article; zbMATH DE number 3155238 (Why is no real title available?)
• Inventory management with log-normal demand per unit time
• Mathematical analysis of an inventory case

Cited in

(2)

• The Effect of Estimation Risk in Establishing Safety Stock Levels in an Inventory Model
• A theoretical validation of the DDMRP reorder policy

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