SIGNIFICANCE OF ANTICIPATING DEMAND FOR THE INVENTORY MANAGEMENT PROCESS OF AN ENTERPRISE BY APPLYING THE MONTE CARLO SIMULATION

Abstract

More than ever, market conditions are limited by financial resources. One of the major costs of business entities is the costs of inventory management. Successful business doing in modern conditions requires an efficient application of inventory management. Each business entity aspires to satisfy its clients’ needs with minimal inventories. Efficient inventory management requires the anticipation of demand for a certain product or for a group of products. Efficient inventory management offers a possibility of creating sustainable competitive advantage and improving the competitive position of an enterprise. In the first part of the paper, the significance of inventories, inventory management and the influence of inventory management on the business doing of an enterprise are presented. The second part of the paper contains the theoretical framework for the anticipation of demand, whereas in the third part the research results are presented. The subject matter of the research study conducted in his paper is the determination of the significance of the anticipation of demand for the inventory management process of the considered enterprise by applying the Monte Carlo Simulation. The Monte Carlo Methods can be defined as the statistical simulation methods that apply series of random numbers for the purpose of conducting a simulation. Nowadays, the Monte Carlo Simulations are used for solving the most complex problems of business doing. The goal of the research study is to determine the optimal level of the inventories of television sets on the basis of the anticipated demand with the aim of managing the same in an efficient manner.