Assessment of stock size to minimize cutting stock production costs

J. Erjavec, M. Gradisar and P. Trkman

International Journal of Production Economics, 2012, vol. 135, issue 1, 170-176

Abstract: A method for assessing the optimal stock size for the expected order size for a single-period one-dimensional cutting stock problem is proposed. The stock size is optimal when the expected total costs of trim loss, warehousing, and non-fulfilment are minimum. The stock size is the sum of all bar lengths in the stock, and the order size is the sum of shorter bar lengths in various numbers of pieces. Using simulated test cases, a statistical estimation of optimal stock size is conducted, which in our case is approximately 50% above the expected order. The proposed method can help company choose the appropriate level of stock to minimize their total costs.

Keywords: Cutting stock problem; Inventory management; Cost minimization; Simulation (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:135:y:2012:i:1:p:170-176

DOI: 10.1016/j.ijpe.2010.10.001

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