PURCHASING RAW-MATERIALS WITH UNCERTAIN FLUCTUATING PRICES

The aim of this review is to highlight the real problems that exist. The component stages of the commodity purchasing decision and hence the different approaches and skills required are identified. Various methods and models that have been proposed and applied to the different stages are described. Important aspects are the inadequacy of classical inventory models, the application of linear programming to the blending problem, price forecasting via econometric and time series analysis and sequential decision making for day to day buying.