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23download_doc-13.php - c. Saw tooth Diagram i. If it is...

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I. Inventory Control Part 2: Uncertainty a. Inventory policy i. How much to order 1. Found by calculation of Q ii. When to order 1. Found by ROP b. FOQ with uncertain demand i. Remove assumption of certain demand 1. But demand is still constant ii. Demand is normally distributed iii. Instantaneous replenishment iv. Service level: percent change that there isn’t a stock out during a given inventory cycle 1. Run-out 2. Back order 3. Reflects how often to expect to run out of inventory or vice versa v. If RP = DLT, what is the service level 1. 50%! 2. DLT = demand lead time 3. ROP = reorder point 4. Lead time= time from when you order til you get it
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Unformatted text preview: c. Saw tooth Diagram i. If it is flat 1. There is no demand ii. If it is steep 1. There is a spike in demand iii. ROP 1. Time at what point in inventory do we order Q iv. Always order Q v. Freedom of when we order Q vi. Dl = demand during lead time vii.SS = safety stock d. Basic notes i. If the product is crucial 1. There is a high service level ii. If the product is not crucial 1. There is a low service level iii. The higher the service level, the higher the reorder point, the higher the risk of excess demand...
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This note was uploaded on 04/18/2011 for the course BUS 370 taught by Professor Camp during the Fall '09 term at Indiana.

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23download_doc-13.php - c. Saw tooth Diagram i. If it is...

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