Storage capacity: how big should it be
A mathematical model was developed for determining the economically optimal storage capacity of a given material or product at a manufacturing plant. The optimum was defined as a trade-off between the inventory-holding costs and the cost of customer-service failures caused by insufficient stocks for a peak-demand period. The order-arrival, production, storage, and shipment process was simulated by Monte Carlo techniques to calculate the probability of order delays for various lengths of time as a function of storage capacity. Example calculations for the storage of a bulk liquid chemical in tanks showed that the conclusions arrived at, via this model, are comparatively insensitive to errors made in estimating the capital cost of storage or the risk of losing an order because of a late delivery.
- OSTI ID:
- 5568253
- Journal Information:
- Chem. Eng. (N.Y.); (United States), Vol. 87:2
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
POLICY AND ECONOMY
INDUSTRIAL PLANTS
INVENTORIES
STORAGE FACILITIES
OPTIMIZATION
MATERIALS
DELIVERY
CAPACITY
CAPITALIZED COST
ECONOMICS
ERRORS
FAILURES
FUNCTIONS
LOAD MANAGEMENT
MANUFACTURING
MATHEMATICAL MODELS
MONTE CARLO METHOD
PEAK LOAD
REAGENTS
SIMULATION
STORAGE
TIME DELAY
COST
MANAGEMENT
290700* - Energy Planning & Policy- Transport & Storage