Proposal of reorder point satisfying allowable shortage rate under limited demand information

Yasuhiko Takemoto, Ikuo Arizono

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Reorder point determination is one of issues in inventory management. A reorder point is a trigger of timing in the replenishment. The reorder point is generally determined based on an allowable probability of stockout. The conventional design of the reorder point is frequently based on the assumption that demand is independently and identically distributed and then follows a normal distribution. In a real situation, it may be unbelievable that daily demand is identically distributed. Also, the assumption of normality for demand is not always appropriate. In this study, the decision procedure of the reorder point by using the limited demand information such as expectation and variance for demands is proposed. The reorder point meeting the specified allowable probability of stockout is derived by using some probability inequalities. Then, the usefulness of our proposal is shown through some numerical simulations.

Original languageEnglish
Title of host publication21st International Conference on Production Research
Subtitle of host publicationInnovation in Product and Production, ICPR 2011 - Conference Proceedings
EditorsTobias Krause, Dieter Spath, Rolf Ilg
PublisherFraunhofer-Verlag
ISBN (Electronic)9783839602935
Publication statusPublished - Jan 1 2011
Event21st International Conference on Production Research: Innovation in Product and Production, ICPR 2011 - Stuttgart, Germany
Duration: Jul 31 2011Aug 4 2011

Publication series

Name21st International Conference on Production Research: Innovation in Product and Production, ICPR 2011 - Conference Proceedings

Other

Other21st International Conference on Production Research: Innovation in Product and Production, ICPR 2011
CountryGermany
CityStuttgart
Period7/31/118/4/11

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Keywords

  • Allowable probability of stockout
  • Inventory management
  • Limited demand information
  • Probability inequality
  • Reorder point

ASJC Scopus subject areas

  • Control and Systems Engineering
  • Computer Science Applications
  • Industrial and Manufacturing Engineering

Cite this

Takemoto, Y., & Arizono, I. (2011). Proposal of reorder point satisfying allowable shortage rate under limited demand information. In T. Krause, D. Spath, & R. Ilg (Eds.), 21st International Conference on Production Research: Innovation in Product and Production, ICPR 2011 - Conference Proceedings (21st International Conference on Production Research: Innovation in Product and Production, ICPR 2011 - Conference Proceedings). Fraunhofer-Verlag.