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An Optimal Algorithm of Material Reserves Management based on Probabilistic Model

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  • Artur Dmowski
  • Jakub Bis

Abstract

Purpose: In this paper a design of the probabilistic model of reserves is discussed. The objective was an elaboration of the optimal strategy of materials reserves management in the series of manufacturing. Design/Methodology/Approach: The methodology of the Fundamental Power Index (FPI), the model of reserves has been verified as far as it was feasible using numerical data concerning various wood products including furniture of series production. The presented probabilistic model of reserves allows the formation of optimum strategy of the (R, Z) type of primary materials management with due consideration to profits coming from low-cost components in working and furniture industrial company. Findings: The results of the study reflect that to ensure the production continuity, the reserves of different kinds of based material are generated and maintained. In the furniture industry, wide range and community of decisions, as well as, economic influence of wrong decisions concerning material reserves are of such importance, that they prove a need of overworking an optimal strategy of based material reserves management on the basis of the probabilistic model with an application of computer technique. Practical Implications: The model has been verified at an attainable scale using the numerical data concerning different assortment of materials in the serial production of furniture. The proposed probabilistic model makes it possible to elaborate the optimal strategy of type R, Z in the management of reserves of based materials of the manufacturing company with large-lot production. The strategy is based on minimal expenses connected with a supply of materials. Originality/Value: The constructed probabilistic model of wood reserves management has methodological value because it shows the method of working out an optimal strategy of basal reserves of based material management in the conditions of serial and poly-assortment production of furniture and other based products in special conditions of economical practice in the furniture industry.

Suggested Citation

  • Artur Dmowski & Jakub Bis, 2021. "An Optimal Algorithm of Material Reserves Management based on Probabilistic Model," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 179-188.
    • Handle: RePEc:ers:journl:v:xxiv:y:2021:i:special1-part2:p:179-188
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    More about this item

    Keywords

    Modelling; probabilistic model; material reserves; management; strategy.;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other

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