PROBABILISTIC INVENTORY MODEL OF CERTAIN DETERIORATING MATERIAL: NEWSPAPER

Abstract

Inventory control needs to be carried out in order to optimize inventory costs while still paying attention to the condition of goods or products in stock. Goods inventory management can place a company in a safe zone from the threat of inventory problems to meet demand. Many inventory problems are caused by erratic or inconsistent demand. This gives rise to uncertain operational activities so it can be assumed that the inventory model used is probabilistic. One of the probabilistic models that is often used is the model Economic Order Quantity Probabilistic. Economic Order Quantity (EOQ) Probabilistic is an inventory model based on assumptions about demand and lead time. Thus, we will be showing the use of Probabilistic model for newspaper vendor model. The newsvendor model is a supply chain and inventory management concept that can be applied to a newspaper vendor's dilemma. The model helps a vendor to decide how many newspapers to buy each morning before knowing how many they will sell. Here are some factors that affect the newsvendor's inventory decision: fixed cost, variable cost, initial inventory level, penalty cost, and constant customer demand. By the Probabilistic EOQ Model we can generate an inventory model for a certain deteriorating material. By using above methodology, we have created a real time example and solve it. By minimizing the expected cost per unit time.