Mathematical programming approach to inventory control

Abstract

In many production systems inventory cost is the major element of investment. It is essential in these systems to hold inventory at a near optimal level to minimize the total costs of the system. This paper presents a procedure for developing an optimal inventory control plan which can be solved by mathematical programming. Input to the model includes demand forecasts, ordering costs, carrying costs, shortage costs, price break data, space constraints, and probability of usage. Most of the factors affecting this plan are investigated in order to simplify the way of handling all the input values.