Accession Number : AD0820997
Title : DEFERRED PROCUREMENT.
Corporate Author : ARCON CORP LEXINGTON MA
Report Date : 01 MAY 1967
Pagination or Media Count : 103
Abstract : Attempts at a theoretical analysis of the functional equation have been fruitless. The computer results (assuming that the FORTRAN Program is indeed debugged) seem to indicate that optimal policies have no simple structure, in general. Nonetheless, the exact optimal policy can be computed, and, from the practical point of view, this is what counts most. On the other hand, the inability to reconcile unorthodox optimal policies with 'physical intuition' will undoubtedly cause raised eyebrows (to say the least) amongst seat-of-the-pants inventory managers. This may prove to be a serious problem which can be overcome, perhaps, by simulation studies which compare the operating characteristics of the optimal policy with those of a more conventional ad-hoc procedure. If this is done with historically 'real' data and if the theoretically optimal but intuitively strange policy comes out best, it would serve to sway some opinion. Such a simulation would be more meaningful if the model were made more realistic. Perhaps the most important step in this direction involves the introduction of delivery lags. These can be made deterministic, stochastic or, perhaps, can be made to depend on T, the time since the last order was placed. This would reflect the need for 'tooling up time' in cases where orders have not been placed for a long time.
Descriptors : (*INVENTORY CONTROL, MATHEMATICAL MODELS), (*INVENTORY, OPTIMIZATION), (*TIME LAG THEORY, INVENTORY CONTROL), NAVAL PROCUREMENT, COMPUTER PROGRAMS, THEORY, TABLES(DATA), COSTS.
Subject Categories : Logistics, Military Facilities and Supplies
Distribution Statement : APPROVED FOR PUBLIC RELEASE