Inventory Management For Stochastic Demand And Lead Time Products
Inventory management is one of many revenue management techniques which focuses on balancing between the
customer demand and supply. Inventory management plays a vital role in reducing the stocking cost while preparing enough
products to guarantee the customers’ satisfaction. This paper presents one of many inventory management strategies to deal
with an uncertain behavior of various important factors, stochastic demand and lead time. Search algorithm and a simulation
are used in order to determine the optimal reorder point (ROP*) according to important parameterse.g., the demand, lead
time of products, and the minimum order quantity (MOQ).The search method in this paper is decrease the search space by
half in every round. The result shows the company can reduce the reorder point for about 20-30%, but likely stay the same
for the service level.
Keywords: Inventory Management, Reorder Point, Stochastic Demand, Stochastic Lead Time.