A Basis for Strategic Decisions on Inventory Control Operations

It is the purpose of this paper to suggest that inventory control operations involve two distinct types of problems which may be identified as tactical decision problems and strategic decision problems. The difference between these two types of problems will be discussed in more detail below. For the moment it is sufficient to observe that a solution to the tactical problem defines a family of decision rules while a solution to the strategic problem involves a final selection of some particular member of this family. It will be suggested, further, that while much attention has been given to the tactical decision problem, the methods typically employed to solve the strategic problem are frequently less than satisfactory. Finally, an alternative approach to strategic decisions on inventory control operations will be outlined. This alternative approach will be illustrated through two specific examples taken from recent experience.