Data Analysis

Designing an auto-adaptive inventory replenishment system

In a periodic-review inventory replenishment system, two key questions are when to order (at which level of inventory) and how much to order (order up to which level). A periodic-review replenishment policy requires these two parameters (s,S)  be specified for each stock keeping unit (SKU). These parameters should be estimated based on the demand pattern of the corresponding SKU. However, in a volatile business environment a certain parameter set can be outdated very frequently.

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