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Safety stock determination of uncertain demand and mutually dependent variables

Author

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  • Sharfuddin Lisan

    (Bangladesh Institute of Human Resource Management (BIHRM) –Supply Chain Department, Dhaka, Bangladesh.)

Abstract

Safety stock is that point, where the user finds a comfort zone between overstock and understock situation. It is is deï¬ ned as the buffer inventory have to be kept to deal with differences between supply and demand. There are different variables to be considered while determining safety stock. In this writing there is an effort to establish a model that include direct and indirect cost related to inventory. The inclusion of Ordering cost, holding cost, Product price, Time, Demand, Demand Variation, Lead time, Mean lead time, Errors in Forecasting, Deviation of lead time etc. are used in this model. This model works economic order quantity, regression, and forecasting error calculation to estimate safety stock while reducing human judgment error in the calculation.

Suggested Citation

  • Sharfuddin Lisan, 2018. "Safety stock determination of uncertain demand and mutually dependent variables," International Journal of Business and Social Research, LAR Center Press, vol. 8(3), pages 1-11, March.
    • Handle: RePEc:lrc:larijb:v:8:y:2018:i:3:p:1-11
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    References listed on IDEAS

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    More about this item

    Keywords

    Dependent Variables; Direct and Indirect Inventory Cost; Safety Stock; Uncertain Demand.;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other

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