The Effect of Sales Smoothing on Inventory Performance

The Effect of Sales Smoothing on Inventory Performance This paper outlines z transform methods used to describe control of an inventory system. It examines how the form of the sales smoothing function affects the performance and sensitivity of the system to smoothing transfer functions. Graphical output from the Simulink package used the equations developed for an AIOBPCS inventory system. The analysis using sensitivity functions illustrates the frequency range over which the system is sensitive to the sales smoothing. For practical exponential smoothing this sensitive frequency window is in the range of weekly variations. The results presented here illustrate that the control-theoretic models show how sensitive the inventory is to sales smoothing. Replacing the traditional moving average technique with one based on control theory results in much lower stockout.