TRB&S HAS RECENTLY COMPLETED an extensive research and development
project to explore the feasibility and desirability of
using Operations Research techniques in the area of inventory management
for a retail department store. Although this project was under
the direction of the Management Sciences Division of the firm, much
of the development work was done by members of the Audit and
Management Services staffs of the Detroit and St. Louis Offices.
Several man-years of effort were devoted to this project before a
practical and economical inventory management system was designed.
This system was given the name "Selective Inventory Management."
Before discussing some of the basic principles of Selective Inventory
Management, we should consider the reasons why our research
effort was directed to the retail industry. During the years following
World War II considerable interest developed in the study of the
feasibility of applying Operations Research (abbreviated OR) techniques
to the solving of business problems. Most of the research
efforts during these years were directed toward industrial situations.
As our firm developed a staff of scientists qualified in OR techniques,
we decided to explore the areas in retailing wherein OR techniques
might have application.
Our preliminary research in retailing was motivated by the fact
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