Article
Article
Supply chain management
Article By:
Murty, Katta G. Department of Industrial and Operations Engineering, University of Michigan, Ann Arbor, Michigan.
Last reviewed:January 2020
DOI:https://doi.org/10.1036/1097-8542.802220
Beginning with the work of Ford W. Harris in 1915 on the economic order quantity (EOQ) model, many researchers developed a variety of mathematical models for minimizing the costs associated with holding inventories (raw materials, components, subassemblies, work in process, and finished goods) in industries and businesses. The subject dealing with these problems was initially called inventory control. These models were essentially single-decision-maker models involving one item. In those days, several reasons for holding sizable inventories were given, including economies of scale; uncertainties in demand, supply, delivery lead times, and prices; and a desire to hold buffer stocks as a cushion against unexpected swings in demand and to assure smooth production flow. See also: Inventory control
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