COMPUTER SIMULATION FOR STOCHASTIC INVENTORY MANAGEMENT
Abstract
In this paper, the importance of inventory management for gaining a competitive advantage of a certain enterprise is shown. Furthermore, the basic – deterministic model of inventories is presented and the methodology for determining the optimal quantity of order is given. In addition, the stochastic inventory model has been developed with a detailed analysis of the uniform and normal distribution of demand probabilities. In order to introduce the reader to the computer simulation of inventory management, a brief overview of the general principles of simulation methods is given, with their advantages and disadvantages. Moreover, a computer simulation of the management of inventories for a specific case was performed by developing a software application in the Python programming language. The results of the simulation modeling are shown in tabular and graphical form. In the conclusion, an interpretation of the obtained results from the execution of the program is given and proposed guidelines for further research are given by simulating other parameters of the inventory, when the following occur as random variables: order quantities, the level to be re-ordered, the cost of inventory and delivery time. Validation of the mathematical model has been performed and it has been compared with similar mathematical models based on which it has been shown that the results are realistic and expected.
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