On the Evaluation of Shortage Costs for Inventory Control of Finished Goods

Muhittin Oral, Michael S. Salvador, Arnold Reisman and Burton V. Dean
Additional contact information
Muhittin Oral: The Scientific and Techinical Research Conucil of Turkey, Ankara
Michael S. Salvador: Asystance Corporation, Research Triangle Park, North Carolina
Arnold Reisman: Case Western Reserve University
Burton V. Dean: Case Western Reserve University

Management Science, 1972, vol. 18, issue 6, B344-B351

Abstract: This paper summarizes work performed in evaluating shortage costs associated with stockouts for each of a manufacturer's seven thousand catalogued line items. A modified version of a decision tree model proposed by Yu Chang is employed in a determination of estimated unit shortage costs for a stratified random sample of items. The data required by this model for describing customer behavior were obtained via direct interviews and an extensive mail survey, while the remaining data were extracted from records of the manufacturer. The results are extended to all items on the basis of an excellent correlation between, the evaluated unit shortage costs and unit gross profits of the items in the sample.

Date: 1972
References: Add references at CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.18.6.B344 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:18:y:1972:i:6:p:b344-b351

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().