FORTRAN 4 computer program calculates optimum size of a small inventory of relatively complex or expensive items. This program can be used in situations where the initial cost of purchase is large or when there is a need for a balanced inventory on a short production run

Kaspar, H.

English

NASA Technical Reports Server

November 1966	 Brief 66-10506 
NASA TECH BRIEF	
1 
NASA Tech Briefs are issued to summarize specific innovations derived from the U. S. space 
program and to encourage their commercial application. Copies are available to the public from 
the Clearinghouse for Federal Scientific and Technical Information, Springfield, Virginia 22151. 
Computer Program Determines Inventory Size 
.
The problem: 
To determine the optimum size of a small inventory 
of relatively complex or expensive items. 
The solution: 
A FORTRAN IV computer program that calculates 
the optimum initial inventory size in a problem based 
on minimum costs for the assumed model of inventory 
behavior, and within the restraints of relevant cost and 
time factors specified by the user, for the specific 
problem. 
How it's done: 
The program is based on a model that assumes a 
small replenishable inventory of expensive items that 
are withdrawn according to a Poisson distribution 
with some known average rate. Withdrawal of an 
item from inventory creates an immediate reorder, 
and delivery time intervals are assumed to be expo-
nentially distributed. Queues are not considered in 
the model; that is, service is instantaneous and re-
quests for unavailable items are cancelled immedi-
ately. 
The inventory control program is also particularly 
applicable to damageable and repairable items. In 
this situation the number of items that fail in a given 
time interval is assumed to be Poisson distributed and 
the repair or replacement times are exponentially 
distributed. 
The cost function for controlling this type of 
inventory balances the cost of acquiring items that 
may never be used against the cost, due to unfilled 
demands. The optimum initial stock size is determined
by the minimization of total costs in this balance. This 
is established on the basis of a solution of differential 
equations for the first and second moment of the in-
ventory-size distribution. 
The computer program that performs this optimiza-
tion is written in FORTRAN IV and is limited to in-
ventories of size 40. The required input parameters to 
the program are the failure or withdrawal rates, re-
plenishing rate, cost factors, and the time interval 
over which the inventory is to be controlled. 
Notes: 
1. This program can be used in situations where the 
initial cost of purchase is large, when there is a 
need for a balanced inventory, on a short produc-
tion run, or in a similar situation where there is a 
relatively small inventory of expensive or complex 
parts. 
2. Inquiries concerning this innovation may be di-
rected to:
Technology Utilization Officer 
Marshall Space Flight Center 
Huntsville, Alabama 35812 
Reference: 966-10506 
Patent status: 
No patent action is contemplated by NASA. 
Source: Hans Kaspar 
of North American Aviation, Inc. 
under contract to 
Marshall Space Flight Center 
(M-FS-1 135) 
Category 01 
This document was prepared under the sponsorship of the National 
Aeronautics and Space Administration. Neither the United States 
Government nor any person acting on behalf of the United States
Government assumes any liability resulting from the use of the 
information contained in this document, or warrants that such use 
will be free from privately owned rights.
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Computer program determines inventory size

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