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An inventory control project in a major Danish company using compound renewal demand models

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An inventory control project in a major Danish company using compound renewal demand models. / Larsen, Christian; Seiding, Claus Hoe; Teller, Christian; Thorstenson, Anders.

In: IMA Journal of Management Mathematics, Vol. 19, 2008, p. 145-162.

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaperJournal articleResearchpeer-review

Harvard

APA

CBE

Larsen C, Seiding CH, Teller C, Thorstenson A. 2008. An inventory control project in a major Danish company using compound renewal demand models. IMA Journal of Management Mathematics. 19:145-162.

MLA

Vancouver

Larsen C, Seiding CH, Teller C, Thorstenson A. An inventory control project in a major Danish company using compound renewal demand models. IMA Journal of Management Mathematics. 2008;19:145-162.

Author

Larsen, Christian ; Seiding, Claus Hoe ; Teller, Christian ; Thorstenson, Anders. / An inventory control project in a major Danish company using compound renewal demand models. In: IMA Journal of Management Mathematics. 2008 ; Vol. 19. pp. 145-162.

Bibtex

@article{9edb67d0ac8111dcb993000ea68e967b,
title = "An inventory control project in a major Danish company using compound renewal demand models",
abstract = "We describe the development of a framework to compute the optimal inventory policy for a large spare parts distribution centre operation in the refrigeration and air conditioning (RA) division of the Danfoss Group in Denmark. The RA division distributes spare parts worldwide for cooling and air-conditioning systems. The warehouse logistics operation is highly automated. However, the procedures for estimating demands and the policies for the inventory control system that were in use at the beginning of the project did not fully match the sophisticated technological standard of the physical system. During the initial phase of the project development, we focussed on the fitting of suitable demand distributions for spare parts and on the estimation of demand parameters. Demand distributions were chosen from a class of compound renewal distributions. In the next phase, we designed models and algorithmic procedures for determining suitable inventory control variables based on the fitted demand distributions and a service-level requirement stated in terms of an order fill rate. Finally, we validated the results of our models against the procedures that had been in use in the company. It was concluded that the new procedures provided a better fit with the actual demand processes and were more consistent with the stated objectives for the distribution centre. We also initiated the implementation and integration of the new procedures into the company's inventory management system. ",
keywords = "base-stock policy, compound distribution, fill rate, inventory control, logistics, stochastic processes",
author = "Christian Larsen and Seiding, {Claus Hoe} and Christian Teller and Anders Thorstenson",
year = "2008",
language = "English",
volume = "19",
pages = "145--162",
journal = "IMA Journal of Management Mathematics",
issn = "1471-678X",
publisher = "Oxford University Press",

}

RIS

TY - JOUR

T1 - An inventory control project in a major Danish company using compound renewal demand models

AU - Larsen, Christian

AU - Seiding, Claus Hoe

AU - Teller, Christian

AU - Thorstenson, Anders

PY - 2008

Y1 - 2008

N2 - We describe the development of a framework to compute the optimal inventory policy for a large spare parts distribution centre operation in the refrigeration and air conditioning (RA) division of the Danfoss Group in Denmark. The RA division distributes spare parts worldwide for cooling and air-conditioning systems. The warehouse logistics operation is highly automated. However, the procedures for estimating demands and the policies for the inventory control system that were in use at the beginning of the project did not fully match the sophisticated technological standard of the physical system. During the initial phase of the project development, we focussed on the fitting of suitable demand distributions for spare parts and on the estimation of demand parameters. Demand distributions were chosen from a class of compound renewal distributions. In the next phase, we designed models and algorithmic procedures for determining suitable inventory control variables based on the fitted demand distributions and a service-level requirement stated in terms of an order fill rate. Finally, we validated the results of our models against the procedures that had been in use in the company. It was concluded that the new procedures provided a better fit with the actual demand processes and were more consistent with the stated objectives for the distribution centre. We also initiated the implementation and integration of the new procedures into the company's inventory management system.

AB - We describe the development of a framework to compute the optimal inventory policy for a large spare parts distribution centre operation in the refrigeration and air conditioning (RA) division of the Danfoss Group in Denmark. The RA division distributes spare parts worldwide for cooling and air-conditioning systems. The warehouse logistics operation is highly automated. However, the procedures for estimating demands and the policies for the inventory control system that were in use at the beginning of the project did not fully match the sophisticated technological standard of the physical system. During the initial phase of the project development, we focussed on the fitting of suitable demand distributions for spare parts and on the estimation of demand parameters. Demand distributions were chosen from a class of compound renewal distributions. In the next phase, we designed models and algorithmic procedures for determining suitable inventory control variables based on the fitted demand distributions and a service-level requirement stated in terms of an order fill rate. Finally, we validated the results of our models against the procedures that had been in use in the company. It was concluded that the new procedures provided a better fit with the actual demand processes and were more consistent with the stated objectives for the distribution centre. We also initiated the implementation and integration of the new procedures into the company's inventory management system.

KW - base-stock policy

KW - compound distribution

KW - fill rate

KW - inventory control

KW - logistics

KW - stochastic processes

M3 - Journal article

VL - 19

SP - 145

EP - 162

JO - IMA Journal of Management Mathematics

JF - IMA Journal of Management Mathematics

SN - 1471-678X

ER -