Dear Mattijs

I understand that the reorder point of 250 in your stock existences is reached when you have produced 373 products.

That is, you have the difference between your maximum stock and 250 units, and with that difference you want to produce 373 different articles. Is this correct?

If it is so, I believe that it can be done using Linear Programming, however, there is no certainty that you will able to produce the 373 items, because it depends of how much resources consumes each one.

Your simulation model can't be opened, therefore, I am unable to answer the question.

If you want send me the problem to [email protected]

Thank you for the info you sent, but what is your question?

Yo say 'how to do this?'

To do what?

What does a flowchart have to do with this? A flowchart for what?

I am afraid that you have to provide more information. The arithmetic analysis you did is of course correct, but I don't still understand which is your point

Nolberto Munier I want the simulation model (attached as a file) to produce an Economic Production Quantity instead of producing untill the target stock (S) is reached, as it is currently doing. So the production will continue untill the Economic Production Quantity of 373 units is produced. Then when the reorder point of 249< is reached. It will simply start producing again untill the Economic Order Quantity of 373 units is produced again.

The flowchart is simply just the flow of the process that can be seen in the enclosed simulation model. I dont think changing the flowchart is necessary so as you said that is probably not relevant.

You will need the simulation program Arena to open and run the enclosed Simulation Model.

Dear Matthiijs

It appears that the problem resides if you get or not new orders when you are below the reorder amount, and during the elad time to produce the EOQ.

Considering the data of your excample, the problem here is that you have a current inventory level of 260 units and receive an order for 100, and then, you are left with 160 units, well below the reorden point, which triggers a production EOQ order of 373 units. If you receive no orders, at the end of lead time you will 249+373 =622 units in stock (S).

But, as you say, if during the lead period you receive an order of 150 more units you will be left with 160 – 150 units = 10 units, since you can honor this additional demand, you will find that at the end of the lead time you will have 622-150+10 = 462 units.

However, if instead of 150 you received an order say for 200 units, you are short 40 units. At that time you have to thigger again the EOQ for 373 units, and the end of the period you will have 622-200-40=382 units, admitting that you did not receive any new order after the 200 units order.

The problem here, as I see it, is that your demand is at random, probably following a gama (Γ) distrinution as a function of timen. At the same time, the lead time is not constant because it depends on the number of units to be produced, which is, is a function of the demand. Surely you have historic data for demands, and then you can consider the mean and the standard deviation of that demand and work with those values, that is assume a probabilistic demand during the year given by the mean and from there compute the lead time.

Or, everytime you receive a ne order when you are already below your reorder amount, you can find the computer with the data of the new demand and with the corresponding lead time, and then compute the final stock target (S).

Possibly what I am suggesting is a very naive solution, but honestly, it is the most I can do, and I think it can work.

I suggest reading this article: ON AN INVENTORY CONTROL MODEL WITH RANDOM LEAD TIME AND RANDOM DEMAND by Eugene Kopytov Leonid Greenglaz.

This is difficult problem and I hope that my suggestion can help you

Best regards

Nolberto Munier

Nolberto Munier That is exactly the problem. And yes the demand is stochastic. Thank you for your help i will look into the article!