CORAL Seminar: Christian Larsen, AU

Title: Alignment between an ABC classification and results from an optimization approach

Info about event


Friday 26 March 2021,  at 14:00 - 15:00


Online via Zoom

Presenter: Christian Larsen, AU

Abstract:  The paper analyzes a multi-item inventory system, using independent (R,Q) policies. The aim is to minimize the average stock level and keeping a weighted (across items) fill rate service level at a given target. The paper explores whether the optimal order sizes and the optimal safety factors are aligned with the ABC classification. Our results show that A items should be ordered more frequently followed by B items and C items. Concerning the optimal safety factors, our results depends on the weights applied in the specification of the weighted service level. If all items have equal weight, A items should have the lowest safety factors followed by B and C items. If the weights are the demand rates, the ranking of the safety factors follows the ratios between the demand rate and the unit purchase price, and the higher this ratio is, the higher is the optimal safety factor. 

Keywords: Inventory control, ABC classification 

Organizor: Erland Hein Nielsen