eprintid: 121
rev_number: 4
eprint_status: archive
userid: 5
dir: disk0/00/00/01/21
datestamp: 2008-01-24
lastmod: 2015-05-29 19:47:43
status_changed: 2009-04-08 16:54:27
type: report
metadata_visibility: show
item_issues_count: 0
creators_name: Paulhus, Mark
contributors_name: Calistrate, Dan
contributors_name: Powojowski, Miro
contributors_name: Sick, Gordon
title: Inventory Optimization using a Renewal Model for Sales
ispublished: pub
subjects: transport
subjects: aerodef
subjects: finance
studygroups: ipsw2
companyname: Boeing Corporation
full_text_status: public
abstract: Any optimization requires a realistic and simple model to predict future sales. The problem presenter had suggested that sales might arrive according to a Poisson distribution. We suggest that the company look at renewal theory for models of future sales orders. They have some very distinct advantages. They are powerful and easy to use, in fact the Poisson distribution is a special case. Renewal models are flexible enough to incorporate a variety of characteristics, such as clustering or regularity, upward or downward drift, and mean reversion. Also, some arguments can be made to justify the renewal models based on financial intuition. A realistic (albeit naive) problem is set up which has an analytic solution and other solution methods are discussed.
problem_statement: Year to year, there are wide fluctuations in the demand of airplane orders at Boeing. This causes massive lay-offs and hirings which has very high cost. The problem is to devise a financial strategy to deal with these fluctuations so as to maximize the long term profit of the company.
date: 1998-06-05
date_type: published
citation:   Paulhus, Mark  (1998) Inventory Optimization using a Renewal Model for Sales.  [Study Group Report]     
document_url: http://miis.maths.ox.ac.uk/miis/121/1/boeing2.pdf