Multi-criteria ABC classification and mathematical modeling for multi-product inventory control with budget constraints
Keywords:
Multi product, Inventory Control, TOPSIS, Mathematical ModelArticle Sidebar
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The multi-item inventory management problem with stochastic demand and budget constraints is a challenge for managers, as they must decide when to place an order and what quantity to order. The decision to order depends on whether the current inventory is sufficient to meet future demand, and the quantity to order depends on the estimate of future demand and the desire to have a permissible amount of stockouts. Due to demand uncertainty, stock replenishment decisions are expected to provide a high level of service for all items; however, if stockouts occur, they are expected to have a minor impact on customers. To solve this problem, a hybrid model is proposed that combines multi-criteria classification to classify items according to their relative importance with a linear programming model that establishes replenishment quantities, considering the possibility of different service levels. The results show, for a case study in a healthcare company that must jointly manage a total of 217 items, that the assigned budget allows balancing the purchase quantities of each item under high service levels.
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