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Deriving the optimal safety stock quantity with which to meet customersatisfaction is one of the most important topics in stock management. However,it is difficult to control the stock management of correlated marketablemerchandise when using an inventory control method that was developed under theassumption that the demands are not correlated. For this, we propose adeterministic approach that uses a probability inequality to derive areasonable safety stock for the case in which we know the correlation betweenvarious commodities. Moreover, over a given lead time, the relation between theappropriate safety stock and the allowable stockout rate is analyticallyderived, and the potential of our proposed procedure is validated by numericalexperiments.

Property Safety Stock Policy for Correlated Commodities Based on Probability Inequality