Inventory control system design by integrating inventory classification and policy selection

Very large numbers of inventory items complicate the inventory control process. Companies categorize their inventory items into a few groups and take similar inventory control policies for the items in each group to overcome this problem. In this regard many grouping methods have been proposed. Some researchers have studied the appropriate inventory policy for each group. Since both the actions of categorization and policy selection are sub-optimal solutions for the original problem of efficient inventory control policy, this paper proposes an integrated model to categorize the items and find the best policy simultaneously. As it is difficult to find a global solution, simulated annealing is used to find appropriate solutions. The model results are compared with the findings of other methods both for dissimilarity and total inventory values.