DEVELOPMENT OF STOCHASTIC SIMULATOR OF CONTINUOUS REVIEW (R,Q) INVENTORY POLICY WITH DEMAND LEAD TIME AND RATIONING

Ugochukwu C. Okonkwo, and Sam Nna Omenyi  

Department of Mechanical Engineering

Nnamdi Azikiwe University, Awka

ABSTRACT

Inventory demands categorized into classes of service differentiation are often avoided by researchers, because of the varieties of interacting variables which such research entails. In this paper, however, a model of a continuous review (r,Q) inventory policy having service differentiation of  demands was developed, with complete graphical user interface and digital tracing. In this study, composite stepwise two dimensional graphical representation of the model was formulated, which captured the stochastic demands and stepwise state transitions of the system. The inverse transform algebraic method was applied for the generation of random numbers while next event method was used for the time advancement of the simulation clock. Traces and structured walk through were utilized for the verification of the stochastic simulation models. Batch mean method was used in determining the confidence intervals of the simulation model, with 10⁵ run time and 100 replications. The developed model results were validated with the case study ANAMMCO data. On the average a savings of 18.51% demands in comparison with the conventional models was found, which indeed will result in huge cost savings in absolute terms. Beyond that, the insights from this model will increase the overall efficiency of spare parts inventory control.

Keywords: Simulation, Service Differentiation, Spare Parts Inventory, Rationing