Modelling inventory management: Separate issues for construction and application

Mykhailo Luchko, Iryna Lukanovska, Vadym Ratynsky
DOI: https://doi.org/10.4995/ijpme.2019.11435

Abstract

The article presents the model of inventory management for forestry enterprises. It allows us to make calculationsof the efficiency of the use of inventories, helps minimize the cost of transportation and storage and to avoid fines for lack of inventory in the presence of demand. The suggested model takes into account the dependence of the price of the received reserves, warehouse costs, the cost of holding stocks, the amount of storage costs and penalties for customer stocks that have been unloaded on time. The model will allow us to avoid delays in supply, determine the size and guarantee optimal inventory levels. It is proved that rational inventory management enables companies to calculate the optimal amount of reserveordering, and the time interval between such orders. Putting this model into practice will allow for managing of the logistical and warehouse costs, determining the risk of not receiving or reducing the company’s profits due to the excess inventory costs, and understanding of the efficiency of turnover of inventories. Purpose. The aim of the study is to construct an economic and mathematical model of inventory management of the enterprise, taking into account the dependence of the shipping costfrom the supplier to the warehouse, the cost of holding the stocks, the amount of storage costs and penalties for non-shipped products. Methodology. Approbation of theoretical developments was carried out in the application package Statistica and the use of the module MARSPline – an integral element of technology Data Mining Results. The theoretical contribution. The main dependencies influencing the formation of the value of stocks were discovered on the basis of this and a regression model ofthe optimal size of stocks was constructed with a fairly precise approximation; calculations were made of the efficiency of the use of inventories, minimizing the total costs associated with delivery, storage and fines for the absence of stocks at availability of demand for them. Practical implications. We have constructed, investigated and tested the economic and mathematical model of the optimal size of stocks, which takes into account the dependence of the shipping cost from the supplier to thewarehouse, the cost of holding the stocks, the amount of storage costs and penalties for non-shipped products.

Keywords

Modelling; Optimization; Spline surfaces; Data Mining Results; MARSPline; Statistica pack-age

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