What Is the Inventory Control Multiple Period System?

To keep products on the shelves, businesses must carefully manage inventory. There are many mathematical theories about inventory control including the multiple period (multi-period) inventory control system theory.

Inventory Control

Inventory is the amount of a given product or the total amount of all products a particular business has available to sell. Selling more products decreases inventory, ordering more products increases inventory. When a company has more inventory than it can sell, it loses money. When a company does not have enough products in inventory to meet demand, the company loses customers (and therefore money). Inventory control helps balance between these two extremes.

Multi-Period Inventory Control

Multi-period inventory control addresses one form of the inventory control problem. Let's say a company produces one product. During a certain time period, the company has a certain number of items in inventory, ships a certain number of items, and receives a certain number. There are costs involved in receiving, retaining and shipping the items. These costs are realized over many similar time periods, creating a control problem.

Solutions

Businesses must maintain inventory and balance the costs of keeping, shipping and receiving inventory over many periods. This problem is multiplied when there are several products. Businesses must determine dynamic ordering quantities to satisfy the cost problem. This is the central feature of multi-period inventory control.

References

• Robust Opt: ROME Example: Single Product Multi-Period Inventory Control
• University of South Hampton: Single and multi-period optimal inventory control models
• Repec.org: Robust multi-echelon multi-period inventory control