Inventory control model using exponential smoothing control chart

Abstract

Decision making to determine stock replenishment has an important role in inventory management, especially to anticipate unstable consumer demand. The research aims to design statistical inventory control model for stochastic lead time demand using exponential smoothing and normal distribution approach. The exponential smoothing approach used to design prediction of daily demand and prediction of lead time demand. The normal distribution approach used to design statistical control chart of lead time demand, and also to determine the position of the safety stock and reorder point. Empirical analysis for the research is provided based on case studies for stock replenishment analysis on apparel industry. The results of the research provide a basic concept for decision-making to determine the safety stock and reorder point as the basic parameters in inventory management. The main contribution of the research results provides the application of statistical control chart as statistical inventory control by using smoothing method for data of demand in a lead time as two random variables normal distributed.