Optimal Order Quantity of Electric Power Materials with Compound Poisson Demand Distribution

Abstract

Abstract:

This paper is set in Shanghai Electric Power Company′s material supply system, providing the algorithm of optimal order quantity of power supplies that follow compound Poisson distribution for inventory management strategy. Establishing inventory cost model based on compound Poisson distribution, with optimal order quantity produced by a closed algorithm given the minimum inventory costs. This algorithm is applied to power supplies in empirical analysis. Numerical results show that the algorithm of optimal order quantity proposed in this paper is more suitable for intermittent demand compared to the traditional newsboy model. Considering the problem of inconvenience and inefficiency in business practice, this paper proposes an approximation algorithm and a heuristic algorithm, which can calculate the optimal order quantity quickly and efficiently.

Key words: intermittent demand, compound Poisson distribution, optimal order quantity, heuristics algorithm, approximation algorithm

JIANG Aiping， XIA Hao, GAO Junjun, CHI Qiuguo,WU Siyu. Optimal Order Quantity of Electric Power Materials with Compound Poisson Demand Distribution[J]. Industrial Engineering Journal , 2016, 19(3): 90-95.

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