Experience with a Successful System for Forecasting and Inventory Control

The wealth of management-science literature dealing with optimal solutions to the inventory-control problem would be more impressive if there were not a dearth of evidence of successful applications of these tools. As a step into this gap, this paper describes experiences with an evolutionary approach to a system for the centralized control of inventories of finished products in several branch warehouses; it embodies forecasting and inventory ordering, and is characterized by a man-computer partnership. Both manual overrides of the computer-generated order parameters and exception reporting a Low significant cost savings with no degradation of service. A very simple inventory-control doctrine allowed the operating personnel to gain confidence in the system—and management science in general. Based on this confidence, a simple simulation model was developed to permit evaluating alternative simple algorithms.