Inventory control in environments with seasonal demand

Journal article, 2010

In the traditional reorder point model no consideration is taken to seasonal variations in de-mand. The purpose of this paper is to present an extended reorder point model based on an assumption of stationary demand suitable for ERP systems and capable of taking such con-siderations. The purpose is also to assess potential benefits of using the model by means of simulation and to provide some rough heuristic guidelines for the practitioner regarding when to use the model rather than the traditional one. The result from the assessment indicates that even in cases with low degree of seasonality it is of significant importance to consider sea-sonal variations when calculating the demand during lead time part of the reorder point to be able to achieve targeted service levels. Considering seasonal demand when calculating safety stocks and order quantities is basically only of significant importance in cases when the de-gree of seasonality is high.