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Formula 17. When qtySafety is adequate, the purchase quantities are high, but the frequency is less; however, the production disruption will never occur in this vari-

The final proposed model, illustrated in Figure 6, is based on the aforementioned variable input, but each purchased quantity will consider the trend about the previous lead time of qtyorder. The simplest form of the trend function is shown in Formula 18, taking the MAð Þ<sup>1</sup> first-order derivative, and if the trend is positive (demand increasing), the purchase will plus one additional average quantity; if the trend is otherwise, the purchase will lessen one additional average quantity instead. Comparing this model with the aforementioned variable input, the inventory levels are constantly lower, and it implies the risk is also less in the case the demand drops drastically. For the long-term observed material, the trend can be estimated by a

proper probability distribution or the decision of PEST:

qtypurchase <sup>¼</sup> MA qtyuse; <sup>κ</sup> � � <sup>∗</sup> timelead <sup>þ</sup> Trend MAð Þ<sup>1</sup> qtyuse; <sup>κ</sup>

qtypurchase <sup>¼</sup> MA qtyuse; <sup>κ</sup> � � <sup>∗</sup> timelead (17)

� � � � h i

(18)

able input model.

Figure 6.

38

Figure 5.

Sample material variable input requisition model.

Advanced Analytics and Artificial Intelligence Applications

Sample material trend variable input requisition model.

8.2.3 Trend variable input

Rich C. Lee\* and Man-ser Jan Institute of Applied Economics, National Taiwan Ocean University, Taiwan, China

\*Address all correspondence to: richchihlee@gmail.com

© 2019 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
