Applying the zero-inflated Poisson regression in the inventory management of irregular demand items

ABSTRACT

Managers often need to face the problem to define the inventory level of items having an irregular demand. Difficulties arise when the existing methods cannot be applied due to some hypotheses, leading to wrong inventory levels, and , higher holding costs . In this paper, a methodological framework, based on the Zero-Inflated Poisson regression, and called Spare Part Oriented ZIP Approach (SPOZA) is developed. It aims to simplify the inventory-level evaluation procedure when items have an irregular demand pattern The SPOZA output is the evaluation of the optimal theoretical protection level to fulfil to reduce inventory total costs as a percentage value. Aiming to evaluate the benefits of applying SPOZA, a real-case application is presented. Several scenarios are analyzed, and comparisons with standard forecasting methods are conducted. Results are very promising since SPOZA leads to an inventory costs reduction and performs better than other approaches, especially when the items demand increases.

Graphical Abstract

KEYWORDS:

• Inventory management
• operations management
• irregular demand
• methodological framework
• production system
• cost
• spare parts

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Serena Finco

Daria Battini holds a Ph.D. in Industrial Engineering, and she graduated cum laude from the University of Modena and Reggio Emilia. She teaches and conducts research in the field of industrial system design and management, supply network mapping, modeling and optimization, inventory management and product/process traceability. Her researches are published in several international journals, international conference proceedings, trade magazines, industry reports, and newspapers. She has published more than 60 scientific papers, published in International ISI journals or in proceedings of international conferences Peer Reviewed. She is an Editorial Board Member of the Journal of Management Control and of the International Journal of Optimization and Control: Theories & Applications.

Daria Battini

Giuseppe Converso is a Senior Lecturer in Industrial Plant Maintenance and Safety Federico II University in Naples. He is graduated in Mechanical Engineering and his education includes two Ph.D.s from DICMaPI (Department of Chemical Engineering, Materials, and Production Management). He has several archival publications to his credit in scientific international journals, as well as conference papers and books chapters. His scientific research activity is focused on the following themes: design and management problems of articulated logistics facilities; decision support tools in the planning problems of production activities the problem of maintenance of production systems, configuration problems, and management of supply networks; plant design and configuration of production systems.

Giuseppe Converso

Teresa Murino graduated in Mechanical Engineering and is an assistant professor in the ING-IND 17 “Industrial Mechanical System Engineering” disciplinary group, at the University of Naples Federico II. She teaches Manufacturing System Management, Goods and Services Production System and Industrial Logistics at Engineering Faculty. She is also a Professor at “Consorzio Nettuno.” She is also a reviewer for Elsevier Editorials and other journal ISI indexed. The research activities are mainly concerned with the following topics: Simulation modeling; Maintenance strategies; Supply Chain Management models; Quick Response Manufacturing; Sustainable production processes; Location-Routing and vehicle routing Problem, Lean Service, and Lean production implementation.

Teresa Murino

Serena Finco is a Post-doctoral Researcher at the University of Padova. She holds a joint PhD in Industrial Engineering, and graduated from the University of Padova in Innovation Product Engineering. Her academic research is mainly focused on industrial and logistic system design and modeling, inventory management, human factors, and Industry 4.0 solutions. She is also involved in European and Italian projects.