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Aligning Aggregate Planning with (s,S) Inventory Model in a Stochastic Demand Environment

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  • Shantanu Shankar Bagchi

    (Institute of Management Technology Hyderabad, Hyderabad, India)

  • Rik Paul

    (IBS Hyderabad (Constituent of IFHE University), Hyderabad, India)

Abstract

Designing an aggregate plan is essential for firms to improve the efficiency of their inventory management as well as maintaining supplier relationships over a long run. Aggregate plan is primarily a function of demand uncertainty and the inventory policy in place. Firms tend to follow either a periodic review model ( system) or a perpetual model ( system) for managing inventory time to time; the former being more prevalent due to lower inventory monitoring costs associated. The article proposes a mathematical model that incorporates the principles of inventory model in deciding on the key components of an aggregate plan for each period in a multi-period stochastic demand environment for both stationary and non-stationary demand scenarios. The article also provides numerical illustrations to demonstrate the application of the model.

Suggested Citation

  • Shantanu Shankar Bagchi & Rik Paul, 2018. "Aligning Aggregate Planning with (s,S) Inventory Model in a Stochastic Demand Environment," International Journal of Strategic Decision Sciences (IJSDS), IGI Global, vol. 9(1), pages 29-44, January.
    • Handle: RePEc:igg:jsds00:v:9:y:2018:i:1:p:29-44
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