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Determining the Optimal Order Quantity with Compound Erlang Demand under (T,Q) Policy
Joint Authors
Jiang, Aiping
Tam, Kwok Leung
Bao, Yingzi
Lu, Jialing
Source
Mathematical Problems in Engineering
Issue
Vol. 2018, Issue 2018 (31 Dec. 2018), pp.1-23, 23 p.
Publisher
Hindawi Publishing Corporation
Publication Date
2018-08-19
Country of Publication
Egypt
No. of Pages
23
Main Subjects
Abstract EN
Management of electric equipment has a direct impact on companies’ performance and profitability.
Considering the critical role that electric power materials play in supporting maintenance operations and preventing equipment failure, it is essential to maintain an inventory to a reasonable level.
However, a majority of these electric power materials exhibit an intermittent demand pattern characterized by random arrivals interspersed with time periods with no demand at all.
These characteristics cause additional difficulty for companies in managing these electric power material inventories.
In response to the above problem, this paper, based on the electric power material demand data of Shanghai Electric Power Company, develops a new method to determine the optimal order quantity Q⁎ in a cost-oriented periodic review (T,Q) system, whereby unsatisfied demands are backordered and demand follows a compound Erlang distribution.
Q⁎corresponds to the value of Q that gives the minimum expected total inventory holding and backordering cost.
Subsequently, an empirical investigation is conducted to compare this method with the Newsvendor model.
Results verify its superiority in cost savings.
Ultimately, considering the complicated calculation and low efficiency of that algorithm, this paper proposes an approximation and a heuristic algorithm which have a higher level of utility in a real industrial context.
The approximation algorithm simplifies the calculation process by reducing iterative times while the heuristic algorithm achieves it by generalizing the relationship between the optimal order quantity Q⁎ and mean demand interarrival rate λ.
American Psychological Association (APA)
Jiang, Aiping& Tam, Kwok Leung& Bao, Yingzi& Lu, Jialing. 2018. Determining the Optimal Order Quantity with Compound Erlang Demand under (T,Q) Policy. Mathematical Problems in Engineering،Vol. 2018, no. 2018, pp.1-23.
https://search.emarefa.net/detail/BIM-1208202
Modern Language Association (MLA)
Jiang, Aiping…[et al.]. Determining the Optimal Order Quantity with Compound Erlang Demand under (T,Q) Policy. Mathematical Problems in Engineering No. 2018 (2018), pp.1-23.
https://search.emarefa.net/detail/BIM-1208202
American Medical Association (AMA)
Jiang, Aiping& Tam, Kwok Leung& Bao, Yingzi& Lu, Jialing. Determining the Optimal Order Quantity with Compound Erlang Demand under (T,Q) Policy. Mathematical Problems in Engineering. 2018. Vol. 2018, no. 2018, pp.1-23.
https://search.emarefa.net/detail/BIM-1208202
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references
Record ID
BIM-1208202