Browsing by Subject "Inventory control."

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Open Access
Application of AHP to multicriteria inventory classification
(1993) Güvenir, Nuray
In this thesis, a new method based on the application of Analytic Hierarchy Process (AHP) to ABC inventory classification is investigated. The traditional ABC classification method utilizes only the unit price and the annual usage of inventory items. However, in some cases, the classification done using only these two criteria turns out to be insufficient. The method described in this thesis enables the integration of several criteria that can be organized in a hierarchy into ABC classification. The method can be summarized as follows: A matrix is constructed by the pairwise comparison of criteria on the highest level. The elements of the eigen vector of this matrix represent the weights (priorities) of the criteria. If a criterion has subcriteria in the hierarchy, the weights computed in the similar manner for the subcriteria are multiplied by the weight of the criterion and inserted in its place. Repetition of these steps for aU levels of the hierarchy, the weight of all criteria are determined. Using the criteria weights determined by the AHP technique, the weighted score of each inventory item is computed. The items sorted by that weighted score are grouped in three classes: A, B, and C, as in the classical ABC classification. This new method is applied to the classification of inventory items used in rock excavation jobs done using blasting by a construction company. The same inventory is also classified according to the classical ABC technique, and the results are compared.
Open Access
An application of capacitated lot-sizing model in petroleum sector
(2006) Nurlu, Nuri Barış
In this thesis, we study capacitated lot-sizing problem with special feature, applicable to the petroleum refinery sector. In our model, the end-products should be stored in item-specific and capacitated storage tanks during pre-determined lead-time. Our aim is to find the optimum production schedule resulting minimum total cost whilst satisfying customer demand. To solve this problem in a reasonable amount of time, we propose a branch-and-cut algorithm. We perform experiments based on the data gathered from Turkish Petroleum Refineries Corporation. In order to evaluate our algorithm, we compare the results of our algorithm and the solution results of the optimization software.
Open Access
Cash inventory management at automated teller machines under incomplete information
(2010) Altunoğlu, Yaşar
Automated Teller Machines are one of the most important cash distribution channels for the banks. Since branches have more information about the ATM cash demand compared to headquarters, cash inventory at ATMs is usually managed by the branches. Inventory holding and stock-out costs, however, are incurred by the headquarters. We examine the headquarters’ cash inventory management problem for out of working hours under a Newsboy type setting. In this setting, inventory replenishment is not possible during the period and the headquarters cannot fully observe the amount of stock-outs. The headquarters seeks an inventory policy that would lead the branch to make ordering decisions to minimize the headquarters’ cost. We examine three policies: (M) policy with a lump-sum stock-out cost charged at the end of period, (t, M) policy with a lump-sum stock-out cost charged at time t within the period and (t, L, p) policy with a unit stock-out cost charged at time t within the period for inventory below L. Numerical analysis show that checking the inventory during the period - (t, M) and (t, L, p) policies - can lead to important reductions in cost for the headquarters.
Open Access
A continuous review inventory system in a random environment
(1998) Bayar, Aslı
In this thesis, we develop a continuous review inventory model in a random environment where holding, ordering, and purchasing cost parameters are dependent on the state of the environment. We derive the exact expressions of the operating characteristics of the model and discuss some convexity properties of the expected cost rate. A numerical analysis is provided to examine the sensitivity of the optimal policy parameters with respect to various system parameters. We compare the instantaneous shock model with our model and illustrate that ignoring finite duration of environmental states results in considerable error. Moreo\er. we compare our model with a time-average EOQ and myopic model. The results illustrate that when ordering and purchasing cost parameters change, our model performs significantly better.
Open Access
Coordination of a two level supply chain with two substitutable items
(2004) Yılmaz, Ağcagül
This study deals with a single period newsboy type inventory problem with two products which can be substituted if one of them is out of stock in a two level supply chain. It is allowed to return some or all of the unsold products to the manufacturer with some credit. The expected chain profit, the expected retailer and the manufacturer profit expressions are derived under general conditions. Special cases are inspected to investigate the conditions under which channel coordination is achieved. It is demonstrated that channel coordination can not be achieved if full credit and full returns are allowed.
Open Access
Exact solutions and heuristics for multi-product inventory pricing problem
(2014) Çetin, Oğuz
We study the multi-product inventory pricing problem under stochastic and price sensitive demand. We have initial inventory of m resources whose different combinations form n products. Products are perishable and need to be sold by a deadline. Demand for each product is modeled as a non-homogeneous Poisson process whose intensity is a function of the current price of the product itself. The aim is to set the price of each product over the selling period to maximize the expected revenue. This problem is faced in various industries including retail, airlines, automobile, apparel, hotels and car rentals. Our contributions are twofold. First, we provide a closed form solution for the special case of exponential price response where the elasticity parameter of the demand function of all products are equal. Second, we develop two classes of dynamic pricing heuristics: one using the value approximation approach of dynamic programming and the other using the deterministic version of the problem. Our numerical analysis indicates that dynamic pricing yields significantly higher revenues compared to fixed price policies. One of the dynamic pricing heuristics based on the deterministic problem provides around 5−15% additional revenue compared to fixed price policies. Moreover, two value approximation heuristics that we suggest result in at most ∼ 0.5% and ∼ 3.4% gaps in the expected revenue compared to the optimal dynamic pricing policy for general form of exponential price response. These additional revenues can have a profound effect on the profitability of firms, so dynamic pricing should be preferred over fixed price policies in practice.
Open Access
Generating a robust model for production and inventory control
(1993) Sencer, Aslı
In tills stud}', we generate a production and inventory control model which gives h'obust‘ solutions against demand estimation errors. This model is applied to a real production and inventory system; howe\’er, it is a general model where the demand rate is stochastic with a known probability distribution and other parameters of the system are constant. The proposed model is a bi-objective chicision making model, with two decision variables. .A ‘compromised* solution is found for the problem using the trade-off curve generated by a constrained sequential optimization technique, applied on a nonlinear programming model parametrically. Robustness against parameter estimation errors is tested by sensitivity analysis. Here a new dimension is added to sensitivity analysis methodology by including a sensitivity measure as a ‘cost of error* of parameter estimation. By so doing, the proposed model is tested against the classical EOQ model and it is shown that the proposed model ])erforms far better.
Open Access
A hybrid inventory control policy for medical supplies in hospitals
(2010) Akın, Gökçe
In this thesis, we consider the inventory control problem of medical supplies that arises in a particular hospital environment. The items are stored in nursing stations from where they are retrieved by the nurses and used for the needs of in-patients or out-patients. The nursing stations are replenished from a central warehouse. Items are moved between the hospital’s central warehouse and the nursing stations by a capacitated porter cart. In the representative nursing station that we analyze, the need for the medical supplies by the in-patients can arise at any time during day or night. It is possible to replenish the nursing stations during the day time on a continuous scale; however, this is not possible after-hours because the warehouse operates only during regular working hours. For this particular setting, we propose a hybrid inventory control policy which consists of a continuous review joint replenishment policy to manage the day time demand and a periodic review policy to manage the night time demand. The prior performance measure is set to satisfy the target service levels in the nursing stations. For a special case of the problem with a single item, we develop exact expressions to estimate the policy parameters. For the multi-item case, we analyze the impact of the policy parameters on the service level targets by simulating a representative system under different scenarios. Finally, we analyze a sample data collected from a nursing station and prescribe methods to determine the policy parameters
Open Access
Inventory control system: a case study
(1992) Kocaoğlu, Neriman
There are two objectives of inventory control system. The first one is to maximize the level of the costumer service by having the right goods in sufficient quantities, in the right place, and at the right time. The other is to minimise the cost of providing the right level of customer service. The inventory problem is to determine an ordering policy, determinig when to order and how much to order. In this study,an ordering policy is attempted to be determined for a small merchandise company. The A B C approach is one method to classify inventory items according to their importance. Different ordering policies could be used according to the result of A-B-C classification. The required data are collected and processed in order to determine the ordering polic for each item.
Open Access
An inventory management system for the Purchasing Department of Bilkent University
(1991) Turanlı, Turan
ABC Classification enables management to establish an effective inventory management system. The Economic Order Quantity (EOQ) model minimizes the costs associated with ordering items and holding stocks. This study applies the ABC method and the EOQ model to examine the inventory profile of Bilkent University so that it will aid management in lowering inventory costs and controlling stocks more effectively.
Open Access
Joint decisions on inventory replenishment and emission reduction investment under different emission regulations
(2013) Özlü, Haşim
Carbon emission regulation policies have emerged as mechanisms to control firms’ carbon emissions. To meet regulatory requirements, firms can change their operations or invest in green technologies. In this thesis, we analyze a retailer’s joint decisions on inventory replenishment and carbon emission reduction investment under three carbon emission regulation policies. Particularly, we first study the economic order quantity model to consider carbon emissions reduction investment availability under carbon cap, tax, and cap-and-trade policies. We analytically show that carbon emission reduction investment opportunities, additional to reducing emissions as per regulations, further reduce carbon emissions while reducing costs. We also provide an analytical comparison between various investment opportunities and compare different carbon emission regulation policies in terms of costs and emissions. We document the results of a numerical study to further illustrate the effects of investment availability and regulation parameters. We later extend our analysis to a retailer operating in a newsvendor setting, taking into account the existence of environmentally sensitive customers.
Open Access
Joint economic lot-sizing approach to the just-in-time purchasing problem
(1993) Durusoy, İhsan
One of the important concepts of JIT philosophy is the high frequency with small lots in the delivery process. However, this issue is settled between the purchaser and vendor depending on the existing balance of power. The result of such decisions could end with ordering policies, not suitable for JIT logic and place some disadvantages to one of the parties or both. Additionally, these policies have not considered the effect of transportation cost on the optimal ordering and shipment size quantities; despite the fact that purchased materials must bear transportation charges. This paper develops joint economic lot-size model under deterministic conditions, focusing on the shipment size and its effect to the joint total cost, which also includes transportation cost. For that purpose, the joint model is arranged according to the shipment size. Then a computational analysis is made between each parties shipment size policy with the joint model. Consequently, a full factorial design is generated with four factors at three levels. By using the analysis of variance, the effects of the factors on the joint total cost are investigated.
Open Access
Joint replenishment problem in two echelon inventory systems with transportation capacity
(2006) Büyükkaramıklı, Nasuh Çağdaş
In this study, we examine the stochastic joint replenishment problem in the presence of a transportation capacity. We first study the multi-retailer and singleechelon setting under a quantity based joint replenishment policy. A limited fleet of capacitated trucks is used for the transportation of the orders from the ample supplier in our setting. We model the shipment operations of the trucks as a queueing system, where the customers are the orders and trucks are the servers. Consequently, different transportation limitation scenarios and methods of approach for these scenarios are discussed. We then extend our model to a two-echelon inventory system, where the warehouse also holds inventory. We characterize the departure process of the warehouse inventory system, which becomes the arrival process of the queueing system that models the shipment operations between the warehouse and the retailers. This arrival process is then approximated to an Erlang Process. Several numerical studies are conducted in order to assess the sensitivity of the total cost rate to system and cost parameters as well as the performance of the approximation.
Open Access
Joint replenishment problem with truck cost structures
(2006) Tanrıkulu, Mehmet Mustafa
We consider inventory systems with multiple items in the presence of stochastic demand and jointly incurred order setup costs. The problem is to determine the replenishment policy that will minimize the total expected ordering, inventory holding and backorder costs; the so–called stochastic joint replenishment problem in the literature. In particular, we study the settings in which order setup costs reflect the transportation costs and have a step–wise cost structure, each step corresponding to an additional transportation vehicle. For this setting, we propose a new policy which we call the (s, Q) policy. Under this policy, a replenishment order of fixed size Q is triggered whenever the inventory position of one of the items drops to its reorder point s. The replenishment order is allocated to multiple items to equalize inventory positions of items to the extent possible. The policy is designed for settings in which the backorder and setup costs are high, as it allows the items to independently trigger replenishment orders and fully exploits the economies of scale by consistently ordering the same quantity. A numerical study is conducted to confirm that the policy works as designed and to compare its performance against the (Q, S) and (Q, s, S) policies that were suggested earlier in the literature. The study shows that the proposed (s, Q) policy outperforms the (Q, S) when the backorder and setup costs are high and when the vehicles are not capacitated. When the vehicles are capacitated, the new policy outperforms both other policies under the most settings considered.
Open Access
Modelling and analysis of pull production systems
(1995) Kırkavak, Nureddin
A variety of production systems appearing in the literature are reviewed in order to develop a classification scheme for production systems. A number of pull production systems appearing in the classification are found to be equivalent to a tandem queue so that accurate tandem queue decomposition methods can be used to find the performance of such systems. The primary concern of this dissertation is to model and analyze non-tandem queue equivalent periodic pull production systems. In this research, an exact performance evaluation model is developed for a singleitem periodic pull production system. The processing and demand interarrival times are assumed to be Markovian. For large systems, which are difficult to evaluate exactly because of large state spaces involved, an approximate decomposition method is proposed. A typical approximate decomposition procedure takes individual stages or pairs of stages in isolation to analyze the system and then it aggregates the results to obtain an approximate performance for the whole system. An experiment is designed in order to investigate the general behavior of the decomposition. The results are worth attention. A second aspect of this study is to investigate an allocation methodology to achieve the maximum throughput rate with providing two sets of allocation parameters regarding the number of kanbans and the workload at each stage of the system. Together with some structural properties, the experimental results provide some insight into the behavior of pull production systems and also provide a basis for the proposed allocation methodology. Finally, we conclude our findings together with some directions for future research.
Open Access
Order quantity and pricing decisions in linear cost inventory systems
(1992) Polatoglu, Lutfi Hakan
The primary concern of this study is to reveal the fundamental characteristics of the linear cost inventory model where price is a decision variable in addition to procurement quantity. In this context, the optimal solution must not only strike a balance between leftovers and shortages, but also simultaneously search for the best pricing alternative within the low price high demand and high price low demand tradeoff. To some extent, this problem has been studied in the literature. However, it seems that, there is a need to improve the model in order to understand the decision process better. To this end, optimal decisions must be characterised under a more general problem setting than it has been assumed in the existing models. In this study, we employ such a general model. The overall decision problem can be formulated under a dynamic programming structure. It follows that, the single period model is the basis of this periodic decision model. For this reason, we concentrate first on this problem. Having characterised the optimal solution to this basic model we extend the decision model to account for the multi-period setting. It is established with the results of this study that the decision problem in question is understood better. It is found that the characteristics of the optimal decision under the proposed model can be substantially different from the properties of the optimal solution of the corresponding classical model where there is no pricing decision. The primary reason for this is the fact that when there is a shortage in any period, the price that is set in this period could affect the future revenue which must be accounted in the overall decision problem. That is in a general model, price is an information which has an economic value that is transferred from one period to another just like transfering inventories or backlogs to future periods.
Open Access
Replenishment and transportation pricing decisions under two independent carriers with different modes
(2009) Bingöl, Safa Onur
Freight transportation constitutes a substantial cost component in global economics and consumes significant amounts of energy. With the increasing oil prices, scarcity of resources and environmental concerns, efficient operation of transportation activities has become even more important than it was in the past. These raising concerns necessitate the companies which utilize this activity to plan for transportation more carefully and conservatively, and the ones that support it to appraise its value more cautiously. In this thesis, we consider a setting consisting of a retailer, a truck-load carrier and a less-than-truck-load carrier. We model and solve the retailer’s integrated inventory and transportation problem under the presence of two modes of carriers. Characterising the solution for the retailer’s replenishment problem, we then analyze the transportation pricing decisions of the carriers. We show that substantial savings can be achieved by the retailer due to integrating inventory and transportation decisions. We also quantify the savings for the TL carrier and the LTL carrier through carefully determining their transportation price schedules.
Open Access
Robustness of buffer allocation in multi-product multi-batch deterministic flow lines
(1993) Kurucu, A. Akın
Today in industry flow lines are not just for a single end product. There is a stochasticity, such that there are various demand scenarios at hand, to be satisfied by the flow line. The performance of the flow line should not be very sensitive to demand changes. Aim of this study is to develop buffer allocation guidelines to help flow line designers.
Open Access
A simulation study to determine raw material safety stocks and production batch sizes
(1995) Yılmaz, Gökşın
MRP II controlled production systems are large in scope and generally complex in operation. Consequently the total time required to fill a customer order through procurement and production activities is very long. This study proposes a method to increase the throughput of a real MRP II controlled production system by using the data available in the system. Critical raw materials and subassemblies of a product are determined by using project scheduling techniques. A simulation model is developed by using SIMAN. Simulation experiments are performed for determining raw material safety stock quantities and production batch sizes with the objective of decreasing the time required to fill a customer order.
Open Access
Spare parts inventory management with delivery lead times and rationing
(2004) Koçağa, Yaşar Levent
We study the spare parts service system of a major semiconductor equipment manufacturer facing two kinds of orders of different criticality. The more critical down orders need to be supplied immediately, whereas the less critical maintenance orders allow a given demand lead time to be fulfilled. For this system, we propose a policy that rations the maintenance orders. Under a one-for-one replenishment policy with backordering and for Poisson demand arrivals for both classes, we first derive expressions for the service levels of both classes and then conduct a computational study to illustrate superior system performance compared to a system without rationing. We also conduct a case study with 64 representative parts and show that significant savings are possible through incorporation of demand lead times and rationing.