Forecast cost budget of material ordering and inventory through the price change rate

Abstract To reach the optimal cost budget control, more precise forecast will lead toward to gain this objective. The EOQ ordering type and fixed lead time are considered in this paper. The penalty cost of lacking material is also concerned in this paper. In practice, the determination of the period of historical data collected is very important in forecasting. This study focuses on the selection of historical data period according the price change rate to material ordering/inventory cost forecast. In addition, the Monte Carlo Mathematical Simulation to estimate dynamic time-interval cost of material ordering and inventory is proposed. Surely, the main contribution of this study is to provide a practical tool for decision makers to evaluate the time-interval cost of material ordering and inventory in the nearest future.