ECONOMIC AND MATHEMATICAL MODELING OF INVENTORY MANAGEMENT IN LOGISTICS SYSTEMS
УДК 519.863:338.246.2:330.123.3
Бублєй В.Ю., студентка 3 курсу
ХНЕУ ім. С. Кузнеця
The article considers models and of inventory management at modern enterprises. Mathematical approaches to inventory management are generalized. The importance of improvement of methodical approaches to inventory management at enterprises is substantiated.
Improvement of inventory management system is always an up-to-date problem for Ukrainian entrepreneurs. Inventory arranging is important for several reasons: different terms of production and consumption, high probability of supply’s delay or sudden growth of demand, seasonal production or consumption, distance between consumers and producers, wholesale discounts for big batches etc.
Presence of inventory has some advantages – it assures continuity of production neutralizes the risk of supply failure and can provide over-profit in future due to growth of demand for produced goods. But negative effects of inventory creation also exist – high level of inventory reduces capital turnover and increases warehouse expenses, stocks can be outdated, risk of creation illiquid stocks and other harmful after math for enterprise.
The aim of this article is to generalize methodological and methodical approaches to inventory management and determine the place and role of inventory management in logistic activity of an enterprise.
Different local and foreign scientists have been investigating inventory as economic category and ways of inventory management. Among them are D. G. Bauersocks, G. Shribfeder, T. Savenkova, V. Perebiynis, V. Sergeev, A. Gadzhinskiy, O. Zevakov etc.
After summarizing different meanings of inventory concepts more complete definition can be submitted. Inventory is a part of organizations’ capital and has an integral place in supply chain; inventory are being created to meet production and consumer demand and to assure activity of enterprise. Inventory existence allows to bridge the gap between production and consumption – it causes an increase of organization activity’s securing; dependence between participants of supply chain decreases. Also its worth to mention that inventory is represented as material/non-material values which will be consumed in future.
System of inventory management is a component of united system of floating capital management.Company solvency and liquidity support are depend on effective inventory management.
Usually Ukrainian specialists prefer to use traditional systems of inventory management but it is worth using mathematical models to make management more effective. Application of mathematical methods while solving inventory management tasks leads to optimization and updating activity of national enterprises in current economic circumstances.
According to professionals’ opinion [4] a lot of companies in Ukraine do notembed mathematic methods in inventory management activity. Thereafter problems with inventory turnover and stock maintenance (additional costs)are escalating. There are a lot of methods and inventory management models described in scientific literature but only several of them are practically used. It is mainly connected with limitations, complexity in the calculations, model inconsistency etc.
Nature of demand is one of decisive factors during inventory management model development. In the simplest models it is predicted that demand is static and predefined. At the most cases inventory management is done by optimizing the cost function, including costs for placing orders, purchasing and storing products, as well as losses from deficits. Usually it is quite hard to estimate loss caused by deficit but it is worth paying attention to it as deficit influences the reputation and main economic performance of the enterprise.
The uncertain demand may be stationary, when demand probability does not change in time and non-stationary when the probability function changes over time. In addition to the demand for the formation of inventory management models, the following factors are also taken into account: timing of deliveries; replenishment time; limited space in the warehouse, funds, etc. [1].
It is possible to make comparison and generalization of the main components of different models of inventory management at the enterprise in order to generalize the nature of their components and features (Table 1).
Known models of stock manage men rarely accurately describe the way how real system works. Therefore, the solution obtained on the basis of the models of this class should be considered rather as principle conclusions, than specific recommendations. In a number of difficult cases simulation models need to be used to get a fairly reliable solution.
Table 1
Characteristics of inventory management models
| Inventory management model | Demand character | The need for constant monitoring of inventory stock levels | Additional parameters | Moment of order placement |
|---|---|---|---|---|
| Material Requirements Planning system (MRP) | Dependent, predictable | Absent | Number of already ordered goods; Delivery duration; Deadline for the order | According to current production plans |
| A model with a fixed time interval between orders | Random, constantly changing | Periodic control | Reserve; expected demand | At equal intervals of time |
| Model with fixed batch size | Random, constantly changing | Exists, constant control | Threshold margin | When inventory reaches the threshold level |
| System with fixed periodicity and two fixed levels | Random | Exists | Maximum and minimum level of inventory | When inventory reaches minimum level |
| System which considers discounts for ordered batch size | Random | Absent | Discount size; new item price | When the costs associated with purchasing and maintaining the stock are minimal among all possible purchase options |
| One-period model | Random | Exists, including monitoring the shelf life of products | Expenses related to the deficit; costs associated with excessive quantity of goods | When the costs associated with deficits and excess production are minimal |
| Model with gradual replenishment of the stock | Determined | Exists | Batch size; consumption intensively | Production is resumed when the available stock at the enterprise is exhausted |
| “Minimum-maximum” model | Random | Exists | Threshold level | When the stock is less than or equal to the threshold level |
Made by authorising [1]
There is an assertion that stocks are “frozen” assets of an enterprise that could be put into circulation [1]. Also, it is worth mentioning that there is a risk of inappropriate creation of a stock, because it may never get into production/sales due to lack of demand, changes in production technologies, expiration, etc.
According to many modern researchers [4], to the tendency of production in recent times, problems of increasing the efficiency of processes of creation and management of stocks are not given enough attention. This is explained by the fact that the stock management function is translated into automated warehouse and production management systems at large enterprises, the function is implemented autonomously and does not require additional calculations and constant control.
The total absence of stocks is not possible at modern Ukrainian enterprises feasible. Taking into consideration the fact that demand is stochastic; the main task of supply chain managers is the formation of such parameters of inventory management systems that minimize inventories, while guaranteeing the continuity of production. In order to optimize the use of stocks at an enterprise, it is necessary to increase the flexibility of stocks and their turnover.
The conducted research allows generalizing and supplementing methodological approaches to inventory management under conditions of stochastic deem and as well as to reveal different view son understanding the category of stocks. Modern systems of inventory management are based on the use of economic and mathematical modelling. Further research is required for multi-product inventory management models with occasional demand.
REFERENCES
Chernyshev L.A. Economic-mathematical methods and models: a manual / L.A. Chernyshev. – Yekaterinburg, 2013. – 206 p.
Brodetsky G.L., Gusev D.A. Economic-mathematical methods and models in logistics. Optimization procedures: tutorial / G.L. Brodetsky, D.A. Husev – M.: Publishing Center “Academy”, 2012.
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старший викладач Решетняк І.О.