Construction of adaptive inventory management models for a trading enterprise under unstable conditions

Abstract

This study’s object is the inventory management processes at a retail enterprise under conditions of random fluctuations in demand. The findings are aimed at solving the task related to the complexity in determining the optimal volumes of goods purchases under unstable conditions. As alternatives, it is proposed to consider two policies for replenishing stocks – the policy of a minimum stock of goods and the policy of a permanent reserve stock taking into account the possibility of transferring unsatisfied demand. Each policy is estimated by the value of the expected operating effect, which takes into account the income from the sale of goods and losses from the storage of unsold goods or from unsatisfied demand. The hypothesis put forward assumes that the value of the expected operating effect of each policy could be calculated depending on parameters for the law of the probability distribution of demand volumes and on the economic characteristics of the situation. A model of dependence of the expected operating effect on the volumes of purchases and the parameters of the normal probability distribution functions of demand has been built. Mathematical expressions for the expected operating effect for the two policies under analysis have been derived. A comparative analysis of the effectiveness of these policies was conducted, which made it possible to identify the zones of values of the indicators of the choice situation for which a certain policy is the best. Under certain conditions, the expected operational effect for an arbitrarily chosen policy could reach only 70% of the operational effect corresponding to the best policy. This proves the ability of adaptive management to improve the operational effect as well as its economic efficiency.