Nervousness in inventory control: Analytical results

Abstract

Using a rolling horizon planning framework in inventory control leads to nervousness in the planning system caused by instability of order release decisions in successive planning cycles. For a single-stage inventory system with stochastic demand it is shown analytically, how planning stability is affected by policy parameters if (s, n Q) and (s, S) control rules are applied. It turns out that the reorder points does not influence stability whereas the lot sizeQ and minimum reorder quantityS-s can have a considerable impact. Under the aspect of nervousness the (s, n Q) policy can be assessed to be less risky than the (s, S) rule.