Optimization Raw Materials Inventory Of MTO Under Price Fluctuations

Rapidly changing market environment cause raw materials price fluctuations, it is very difficulty for many manufacturing enterprises to make appropriate purchasing strategy aim at management actual. Accordingly, raw materials inventory optimization has become an important research question for MTO enterprises which is one of special manufacturing enterprises. Current price stochastic volatility for the purchase of raw materials for making research procurement orders for research enterprise is relatively small, and assume all of the finished product orders can be met, which is actually inconsistent with the enterprise. For the past deficiencies, this paper considering the purchase of raw materials price fluctuations based on the introduction of finished products to meet customer order rates, combined orders for the purchase of raw materials and inventory management enterprise actual situation, price fluctuations on the purchase of raw materials inventory optimization studies, the model for MTO inventory optimization of raw materials is established and show an algorithm for computing it, also give a location scheme to provide a theoretical basis for MTO inventory optimization of raw materials. Main studies and achievements of this paper are as follows.This paper would takes the maximization of consumer order fulfillment rate within certain limitations into consideration when establishing the optimization of raw materials inventory model and figure it out. To the question of price fluctuations for MTO inventory optimization of raw materials, this paper is going to introduce the parameter customer order fulfillment rate in a given range, and establish the minimal total costs model, which includes fixed order costs, procurement costs and shortage of punishment costs. Then we designed an approximate algorithm A to inventory optimization, which showed the time complexity--O(n4), and analyzed the approximation ratio. When the difference between maximum and minimum of fulfillment rate of raw materials rates are not so big and price volatility is not so drastic, the algorithm approximation ratio would be close to 1. At last, we would take Xi’an & Control Equipment Co., Ltd. as an example to confirm the model and algorithm effective.This paper would takes the maximization of consumer order fulfillment rate within certain limitations into consideration when establishing the optimization of raw materials inventory model and figure it out. To the question of price fluctuations for MTO inventory optimization of raw materials, this paper is going to introduce the parameter customer order fulfillment rate in a given range, and establish the minimal total costs model, which includes fixed order costs, procurement costs and shortage of punishment costs. Based on the actual situation, there are mainly two categories, one is that raw material supply rate is greater than 1, the other is that raw material supply rate is less than 1. According to two situations above, an approximate algorithm A* is designed, which demonstrates the time complexity as O(n7) respectively, and then, the approximation ratio is analyzed. When the difference between maximum and minimum of fulfillment rate of raw materials rates are not so big and price volatility is not so drastic, the algorithm approximation ratio would be close to 1. At last, we would take Xi’an & Control Equipment Co., Ltd. as an example to confirm the model and algorithm effective.