Kenneth Arrow
Kenneth Arrow was an American economist and 1972 Nobel laureate who, with Theodore Harris and Jacob Marschak, published Optimal Inventory Policy in Econometrica in 1951.
What they did and why it matters
Arrow helped found the mathematical theory of inventory under uncertain demand, which is the basis of how safety stock and reorder points are set today. The 1951 paper showed how to choose the best maximum stock level and reorder point given the distribution of demand, ordering costs, and the penalty for running out. It moved inventory control from fixed-demand formulas like EOQ to models that explicitly handle risk. Every planning tool that sets reorder points from a target service level and demand variability builds on this work.
Related people
Sources
- Optimal Inventory Policy, Econometrica 1951 (Econometric Society) econometricsociety.org
- Nobel Laureate Kenneth J. Arrow dies at 95 (RAND) rand.org