Inventory Management Using a Weekly Review (s, S) Policy at the Bank of Canada

Abstract

While the inventory management problem faced by central banks is complicated in that they must deal with two-way shipments, complex costing agreements and insurance limits on inventory, we were able to develop an adapted version of an (s,S) policy that reduced the costs of the central bank’s inventory management by 25%. Implementation required very little change to the regular practices of the Bank and resulted in very few unintended consequences.