THE EFFECT OF THE SUPPLY ACCURACY AND THE DEMAND-CHANGES ON THE INVENTORIES AND ON THE COSTS

Abstract

The frequency of shortage occurrence depends on the accidental impact of several factors, so the occurrence of a stock shortage is an event that cannot be planned with full certainty. This means that the factors causing the shortage and the occurrence of the expected shortage can be defined only with random variables. By detailing the connection between the fluctuation of demands and the safety stocks, we will present the impact of quantitative factors, and we will analyze the connection between supply accuracy and safety stocks along the time factors. By walking around the periodic and continuous stock review models during our analysis, we will present the relations between the safety stocks and the fluctuation of supply accuracy and also the effect of the demand-changes. We will define the formula for the quantification of the safety stock as well as the occurring costs in connection with stock management and stock shortage.