Software designed to work with various databases to record, process, and order products with the goal of having the right products, at the right time, in the right place, and at the right cost. Inventory management systems expediate inventory related optimal decision making to minimize risks and maximize profit.
Published in Chapter:
Economic Order Quantity Estimation with Uncertain External Information on Product Demand Quantile
Copyright: © 2023
|Pages: 13
DOI: 10.4018/978-1-6684-8474-6.ch008
Abstract
In this chapter, a more accurate method for estimating economic order quantity (EOQ) is suggested. This method improves accuracy by using uncertain external additional information about market demand. External additional information can be available in form of summary statistics (sample means, sample quantiles) and their uncertainty measures (confidence intervals, widths of confidence intervals, standard errors, sample variances, or sample standard deviations). Annual demand was estimated by average sales and improved with the use of uncertain quantile information. It is shown that uncertain additional information can reduce variance of the estimator. This new approach is illustrated using sales data of midsize retail company.