Method to provide sensitivity information for (R,s,S) inventory

Details Method to provide sensitivity information for (R,s,S) inventory Method to provide sensitivity information for (R,s,S) inventory

1997-11-19

2000-02-01

MacDonald, Allen R.

Data processing: financial, business practice, management, or co

Automated electrical financial or business practice or...

Inventory management

705 7, G06F 1760

Patent

active

060213965

ABSTRACT:
Sensitivity information about the average back-ordered sales and inventory levels of a back-order (R,s,S) inventory system is generated with respect to the two decision variables s and S. This information is used for what-if analysis and optimization of the decision variables s and S. The computer implemented algorithm provides sensitivity of both average inventory levels and average back orders with respect to changes in s and q (where q=S-s), for a back-order inventory simulation for any specified demand distribution. Further, the sensitivity information provided by the algorithm is exact when compared to a finite-difference simulation for the case of both discrete and continuous, stationary and non-stationary demands. A finite difference estimate of the sensitivity is obtained by running two simulations where the parameter in question (s or S) differ by a chosen small number, and then calculating the resulting difference in the performance measure of interest, in this case average inventory and back orders.

REFERENCES:
patent: 5446671 (1995-08-01), Weaver et al.
patent: 5699259 (1997-12-01), Colman et al.
Edward A. Silver and Rein Peterson, Decision Systems for Inventory Management and Production Planning, John Wiley & Sons, pp. 256-260, Mar. 21, 1985.
M. C. Fu and J-Q Hu, "(s,S) inventory systems with random lead times," Probability in the Engineering and Informational Sciences, vol. 8, pp. 355-376, Jan. 1994.
P. Glasserman and S. Tayur, "Sensitivity analysis for base-stock levels in multiechelon production-inventory systems," Management Science, vol. 41, No. 2., pp. 263-281, Feb. 1995.
Michael C. Fu, "Sample Path Derivatives For (s,S) Inventory Systems," Operations Research, vol. 42, No. 2, pp. 351-364, Apr. 1994.
"Sample path derivatives for (S,S) inventory systems" M.C. Fu, Operations Research, vol. 42, No. 2, 1994, pp. 351-363.
"(S,S) Inventory systems with random lead times" M.C. Fu and J-Q Hu, Probability in the engineering & informational science, vol. 8, 1994, pp. 355-376.
"Sensitivity analysis for base-stock levels in multiechelon production-inventory systems" P. Glasserman and S. Tayur, Management Science, vol. 41, No. 2, 1995, pp. 263-281.

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