An inventory allocation algorithm in a periodic stock control system where demand type visibility is not available

Abstract

We propose an algorithm for inventory allocation of common products among multiple customers in a make-to-forecast manufacturing system, which uses periodic stock review. The method takes backlogs, unfulfilled forecasts (that cannot be shipped until the end of the period), and planned safety stocks into account and has a series of steps, sequence of which are interchangeable. The algorithm is then applied to the manufacturing system summarised above and further analysis and statistical test show that it outperforms the system where only the demand type is considered and allocation efficiency increases.