This article addresses the problems, difficulties, pitfalls, and drawbacks in inventory management, from teaching and research in academia to applying, installing, and successfully using inventory systems in practice. Some guidelines and suggestions are offered to students, teachers, analysts, users and managers of inventory systems. Several of these guidelines are not uniquely associated with inventory management but apply equally well to the entire OR/MS area. This article is to some extent based on the discussions of a symposium with the same title that the authors organized and participated in during the 11th National Meeting of the American Institute for Decision Sciences, New Orleans, November 1979.
Defense Department requirements for aviation fuels are met with purchases made in the usual competitive bidding environment. This large-scale contract bidding and selection problem is modeled as a mixed integer linear program with a special structure. The solution of this large optimization problem is approached via an algorithm employing decomposition and implicit enumeration techniques which exploit the special structure of the underlying formulation. Computational results and other considerations are discussed.
Significant improvements in a 250,000-item, $400 million inventory system resulting from an unusual academic research project are discussed. Difficulties encountered in implementing well-known theoretical inventory models in a large “real-world” system are emphasized. Validated savings resulting from the research effort are noted.
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