Solving Basic Inventory Models Using Excel

Abstract

In this note, I have introduced a simple way to solve the four basic inventory models using Microsoft excel. This note can be used in courses like economics, operations management, operations research, supply chain management. This note can be used in teaching basic inventory models to avoid the lengthy manual calculation involved in solving them. It can also be used as an interesting example for an advanced class in Excel. The user just needs to enter the data in the white cells and all the results are automatically calculated. We recommend showing students how to first solve the models by hand (not necessarily the example problem), so that they understand the procedure, and then show them how to do it using Excel. The four models considered here are EOQ model, Basic production model, Discount Model and Shortage Model. Using the excel managers would be able to compare the various scenarios provided by the organization. They would f ind it very convenient to use these models.