Challenges in modeling demand for inventory optimization of slow-moving items
Proceedings of the 30th conference on Winter simulation
Simulation Modeling and Analysis
Simulation Modeling and Analysis
Computing small-fleet aircraft availabilities including redundancy and spares
Computers and Operations Research
Computers and Operations Research
Information transformation in a supply chain: a simulation study
Computers and Operations Research
A model for lumpy demand parts in a multi-location inventory system with transshipments
Computers and Operations Research
ABC inventory classification with multiple-criteria using weighted linear optimization
Computers and Operations Research
Extended beta-binomial model for demand forecasting of multiple slow-moving inventory items
International Journal of Systems Science - Production Coordination and Inventory Policies
Hi-index | 0.01 |
The paper deals with the lead-time demand forecasting for inventory management of multiple slow-moving items in the case when the available demand history is very short. Two stochastic models of demand are compared: (i) the first based on the ''population-averaged'' binomial distribution of requests (the traditional approach); and (ii) the second based on the beta-binomial probability distribution that assumes that the demand probabilities for the inventory items follow the beta distribution, and employs the Bayesian framework to forecast the lead-time demand (longitudinal statistical approach). The conducted simulation study shows that using the latter model leads to the significant decrease of the holding cost and higher inventory system reliability. Besides, as follows from the simulation results, the beta-binomial demand model is especially useful when the demand probabilities are low and have the U-shaped distribution.