A closed‐from approach for multi‐item inventory grouping

Vijay Aggarwal

Naval Research Logistics Quarterly, 1983, vol. 30, issue 3, 471-485

Abstract: The problem of optimally coordinating the replenishments of the many items in stock with one another is dealt with in this article. Specifically, it considers this coordination based on classifying the items into a few groups with common order cycles for all the items in a particular group. Assuming that the cumulative distribution by value of the inventory can be characterized by a Pareto function of the type f(n) = n/(an + b), (a, b > 0), it establishes that the optimal boundaries of the groups can be obtained as closed‐form expressions by solving a system of simultaneous equations. The composition of the successive groups thus obtained is found to equipartition the total cost and to follow geometric sequences in relation to the number of items, the value of items, and the lengths of the order cycles. Graphs have been proposed to aid the implementation of the grouping scheme. Simple iterative schemes are outlined within the framework of the Pareto function to handle other relevant costs.

Date: 1983
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Persistent link: https://EconPapers.repec.org/RePEc:wly:navlog:v:30:y:1983:i:3:p:471-485

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