Estimating and auditing aggregate inventory levels at multiple stocking points

Relatively little attention has been given to methods for estimating and auditing distribution network inventories in the aggregate. This article shows that a simple polynomial equation whose coefficients can be determined by means of regression analysis techniques is a good, basic tool for estimating overall inventory levels and can be used to provide insight into the effectiveness of inventory control policies at different stocking points. It also serves as the basis for auditing and controlling current inventory policies on an ongoing basis. Tests of the model in a number of actual cases revealed a predictable association between the inventory policy being used and the coefficient values in the polynomial equation.