engleski

Flour Inventory Decision Support System in Baking Industry

Determining the optimal level of flour inventory is an issue that the baking industry has to deal with on a daily basis. Although a number of models have been developed as support systems for inventory management (whose implementation has been significantly simplified by computers and adequate software), managers in the baking industry (especially in smaller bakeries) persist in basing their decisions on experience and intuition. The main reason for this lies in inadequate education of bakery managers, or more precisely, lack of awareness regarding the advantages of a quantitative approach in problem solving. To make this approach more accessible, this paper presents a flour inventory decision support system based on inventory model with price breaks. In this model, holding costs are defined as a percentage of price. In order to estimate flour demand as accurately as possible, demand values are simulated in the analysis. For each simulated level of demand the order quantity is established which results in minimum total costs. Eventually, the order quantity determined most frequently is considered to be the optimal one. The model application is explained on a hypothetical example. Furthermore, the paper provides the program for solving the stated problem, written in LINGO Modelling Language.

decision support system ; flour inventory ; demand simulation ; program ; LINGO Modelling Language ; optimal order quantity

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