A Study On Stochastic Inventory Management Model For Dried Foods In Outlets

Inventory management is not only the key factor for profit attaining, but also the core for cost controlling. Enterprise operators and managers have to order a great deal of stock to meet customers'needs and avoid out of stock. Meanwhile, high stock is profitable to reduce the order cost. But for one thing, if the stock is too large, it will occupy too much cash and increase holding cost. On the other hand, if the stock is too small, it cannot meet the requirement of selling, and will certainly increase order frequency and thus order cost. Therefore, the inventory management plays a major role in a company operation.As an operator and manager of the outlet must follow up thousands upon thousands articles'stock situation everyday, he or she must achieve the following targets:1. Ensure enough stock to avoid out of stock2. Increase the stock rotation3. Reduce the stock shrinkage4. Strive hard to reach the sale index and profit indexBut, it is a fatal lacuna for all outlets in controlling inventory level and placing orders that only historical sale and stock figure are provided without the ability to forecast the customers'needs on the basis of historical sale and stock figure by scientific method, and without cost analysis and ability to order on the basis of minimal total cost. It is the important reason to lead to large numbers of obsolete stock.On the basis on requirement analysis of an outlet, a practical approach to solve this problem has been put forward. Moreover, inventory management decision depends on plan that is affected by various random factors. Thereby, through research and experiment, a scientific stochastic inventory management model applicable to outlets has been established based on mathematic method. The model not only minimizes the total cost and maximizes the valid profit, but also ensures the given customer service level.