P. Alstrom et P. Madsen, TRACKING SIGNALS IN INVENTORY CONTROL-SYSTEMS - A SIMULATION STUDY, International journal of production economics, 45(1-3), 1996, pp. 293-302
The purpose of this analysis is to evaluate three different tracking s
ignal models. From the point of view of inventory control, we are inte
rested in examining the tracking signal's impact on inventory control
performance as measured by the resulting costs - including holding cos
ts, order costs, and shortage costs. In this analysis we are dealing w
ith an inventory control problem for thousands of different items (typ
ical class B items) with independent demand. It is therefore assumed t
hat inventory is controlled using a simple and in practical inventory
control often used (s, Q) system, where the order quantity is calculat
ed using the EOQ formula, and the order point is determined using a we
ll-known stochastic inventory model. The method used will be stochasti
c simulation, by which it is possible to simulate the practical use of
the tracking signal models together with theoretical inventory models
. The simulations are carried out for different items where the probab
ility distribution of demand is a dynamic normal distribution, with me
ans describing different time-dependent demand patterns, including tre
nds and different seasons.The conclusion, based on the simulation resu
lts, leads to some guidelines on implementing tracking signal methods
in inventory control systems.