A Cost Control Policy for Material Requirements Planning and Procurements.
It is sometimes difficult to predict that a particular material will be out of stock at a particular time. This uncertainty can be avoided by deriving a probability distribution of stock-out. Let us assume that the stock-out of material occur only at the end of a certain period, say t. This paper derives a probability distribution theory of stock-out at time t which minimizes the total cost involved for the planning and procurements of material within a production cycle. A control policy to sustain the system when the inventory cost is a function of time with a known depreciation value is presented.
Keywords: MRPP, Cost Control, Inventory, Probability, Policy