Probabilistic Inventory Analysis

An organization holds the stock in limited quantity for the future purpose to use it properly, when it is required and running all the operations in a continuous flow. To maintain this operation properly an organization has different inventory control models in inventory management. In this paper we have discussed about the inventory models which are beneficial to take decision about the stock for an organization time to time to avoid the problem arises. The deterministic model and the probabilistic model are the two main models in inventory management. In general, demand is not known that model is called probabilistic model and the demand is constant at a fixed interval that model is called as deterministic model.

KEY WORDS: Inventory, Inventory

Demand is taken as quadratic functions of time. Shortages are not allowed and the effect of inflation rate in this model for deteriorating items under inflation. An inventory model is developed for deteriorating items with quadratic demand rate and traditional parameter of holding cost is linearly increasing functions of time and shortages are not allowed. We have discussed the effect of variation in various parameters of the system. Hung [7], published a paper to compare the interior local minimum and the boundary local minimum.

In2015, Serhii ZIUKOV [8], proposed literature review on models of inventory management under uncertainty. Inventories are raw materials, work-in-process goods and completely finished goods that are considered to be the portion of business’s assets that are ready for sale. Formulating a suitable inventory model is one of the major concerns for an industry. Some literature analyzes possible parameters of existing models of inventory control. An attempt is made to provide an up-to-date review of existing literature, concentrating on descriptions of the characteristics and types of inventory control models that have been developed.

CLASSIFICATION OF INVENTORY MODELS

Inventory models are broadly classified

They are also known as the Dollar Limit System and are used for one time ordering for seasonal products or spare parts purchases. This model mathematical expression is:

P ≤ C_u/(C_o+C_u )

Where, Co = Cost /Unit Demand, Cu = Cost/ Demand, P = Probability that unit will be sold. Multi Period Inventory Model: Orders are placed multiple times over the entire production cycle. This model further classified under two categories. There are two general types of multi period inventory systems: fixed- order quantity models (also called the economic order quantity, EOQ, and Q-Model) and fixed-time period models (also referred to periodic system, periodic review system, fixed–order interval system, and P-Model). A fixed Order Quantity Model (Q-Model): Purchase-order is placed at any time, On-hand inventory count is known always. OR

This is used when we want to maintain an item “in-stock,” and when we resupply the item, in a certain number of units must be ordered each time. Figure 5: Fixed Order Quantity Model A Fixed-Time Period Model (P-Model): Purchase-order is issued at a fixed interval of time. An inventory control model that specifies inventory is ordered at the end of a predetermined time period. The interval of time between orders is fixed and the order quantity