Abstract:
The objective of this research was to compare the following four inventory control policies: 1) Economic Order Quantity (EOQ), 2) Silver and Meal Heuristic (SM), 3) Least Unit Cost (LUC), and 4) Part-Period Algorithm (PPA). It was assumed that the simple supply chain structure consisted of a manufacturer, a distributor, and a retailer. The distributor received the demand from the retailer; and the manufacturer received the order from the distributor. At the retailer, deterministic variable demand was assumed. There were the following four demand patterns in this research: 1) demand without trend and seasonality (CON), 2) demand with seasonality but no trend (SEA), 3) demand with seasonality and increasing trend (SIT), and 4) demand with seasonality and decreasing trend (SDT). In comparison, the key performance indicator was the total inventory cost (TIC) consisting of the ordering cost and the holding cost. In this research, the retailers demands were simulated, and the order quantities were determined by the four inventory control policies as mentioned above. It was found that the Silver and Meal Heuristic (SM) method was suitable for all demand patterns (under the scope of this research); because of the lowest total inventory cost. Furthermore, the Economic Order Quantity (EOQ) method was poor, because of the highest total inventory cost.