Monitoring the Performance of a Reorder Point System: A Control Chart Approach

Abstract

In order to ensure that an inventory system is performing correctly, management must continually monitor the system and take corrective action as necessary. Only a few previous articles have suggested techniques for monitoring and diagnosing the performance of a reorder point system. Uses statistical process control charts to monitor the systems performance on an ongoing basis. The proposed system is triggered by unplanned stockouts or by a periodic review of each item′s inventory turnover rate. The system then systematically analyses the stockout and the control charts and identifies the causes, which can be fitness‐related and/or operations related. Problems can be quickly diagnosed and corrective action taken so the reorder point system will perform as intended.

Citation

Watts, C.A., Hahn, C.K. and Sohn, B. (1994), "Monitoring the Performance of a Reorder Point System: A Control Chart Approach", International Journal of Operations & Production Management, Vol. 14 No. 2, pp. 51-61. https://doi.org/10.1108/01443579410053211