2017/01/09 by Takashi Shinzato, Shinzato, Takashi
Economics, Econometrics and Finance · Mathematics · #Applications (stat.AP) #Computational Finance (q-fin.CP) #FOS: Computer and information sciences #FOS: Economics and business #FOS: Mathematics #Optimization and Control (math.OC) #math.OC #q-fin.CP #stat.AP
paper · pdf · doi:10.48550/arxiv.1701.02245
16 pages, 3 figures
arxiv created 2017/01/09 · arxiv updated 2017/01/10
Deriving the optimal safety stock quantity with which to meet customer satisfaction is one of the most important topics in stock management. However, it is difficult to control the stock management of correlated marketable merchandise when using an inventory control method that was developed under the assumption that the demands are not correlated. For this, we propose a deterministic approach that uses a probability inequality to derive a reasonable safety stock for the case in which we know the correlation between various commodities. Moreover, over a given lead time, the relation between the appropriate safety stock and the allowable stockout rate is analytically derived, and the potential of our proposed procedure is validated by numerical experiments.