Optimal Inventories via Customer Service Objectives: Lost Sales, Stock‐Out Costs, and Customer Service

Abstract

In this monograph, our aim is to show a basic approach to producing balanced stock ranges, thus avoiding the cost penalties of over stocking on the one hand whilst averting serious lost sales due to stock shortages on the other. Stocks should not be dealt with in a blanket fashion; certain selling items are a lot more important than others. Simple means of stock classification go a long way to revealing not only under and overstock situations but high priority stock ranges, growth areas, and most importantly declining products which may need phasing out altogether.

Citation

Ray, D. and Millman, S. (1979), "Optimal Inventories via Customer Service Objectives: Lost Sales, Stock‐Out Costs, and Customer Service", International Journal of Physical Distribution & Materials Management, Vol. 9 No. 7, pp. 325-349. https://doi.org/10.1108/eb014454