A method is presented for simultaneously determining order points and order quantities for materials stocked to meet an uncertain and independent demand. A computer simulation procedure minimizes total annual costs (carrying, ordering, incoming transportation, acquisition, safety stock carrying, and expected stockout) for individual stock keeping units. This method allows for the interdependence of order points and order quantities, a comprehensive range of costs as deci sion criteria, discontinuous cost functions, and optimal solu tions for discrete units. Flowcharts document the procedure, and cost tables of actual applications demonstrate the results of the model.
Ballou, R.H.Business Logistics ManagementPrentice-HallEnglewood Cliffs, New Jersey1973 pp. 278-302 and 341-344
2.
Baumol, W.J.Vinod, H.D. "An Inventory Theoretic Model of Freight Transport Demand" Management Science vol. 16 no. 71970 pp. 413-421
3.
Buffa, F.P.Reynolds, J.I. "The Inventory-Transport Model with Sensitivity Analysis by Indifference Curves" Transportation Journal vol. 16 no. 21977 pp. 83-90
4.
Constable, G.K.Whybark, D.C. "The Interaction of Transportation and Inventory Decision" Decisions Sciences vol. 9 no. 41978 pp. 688-699
5.
Covie, J.J.Bardi, E.J.The Management of Business LogisticsWest Publ. Co. St. Paul, Minnesota1976 pp 79-88
6.
Langley, C.J. Jr. "The Inclusion of Transportation Costs in Inventory Models: Some Considerations" Proceedings of the Ninth Annual Transportation and Logistics Educators Conference1979 pp. XX-XX
7.
Stenger, A.J.Coyle, J.J.Price , M.S. "Incorporating Transportation Costs and Services into the Inventory Replenishment Decision" In Applied Distribution Research (R.G. House and J.F. Robeson, eds.) The Ohio State UniversityColumbus1977 pp. 22-26
8.
Whitin, T.M.Hadley, G.Analysis of Inventory SystemsPrentice-HallEnglewood Cliffs, New Jersey1963 pp. 159-232
