STUDY OF DEMAND VARIATIONS ON A PRODUCTION-INVENTORY SYSTEM BASED ON THE COST ASPECTS USING STATISTICAL ANALYSIS.

This paper discusses the effect of demand variations on a production-inventory system manufacturing multiple products in terms of cost considerations. The various costs involved due to change in demands of the products with respect to the types of products and planning periods are identified in detail. The mathematical analysis is also useful in determining the production capacity and inventory level requirement to satisfy the customer to certain level which is to be decided by the management. Two important factors (Number of types of products and Multiperiod planning horizon) are considered to identify the costs as well as production capacity and inventory level requirements. A statistical method, viz. , Analysis of Variance, is used to study the variations of demands and costs involved.