Probabilistic Example

Probabilistic Example - Time Q 1 Q 2 Target maximum ( T ) P...

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1 Probabilistic Example Average daily demand ( normally distributed ) = 15 Standard deviation = 5 Lead time is constant at 2 days 90% service level desired Z for 90% = 1.28 From Appendix I ROP = (15 units x 2 days ) + Z σ dlt = 30 + 1.28(5)( 2) = 30 + 8.96 = 38.96 ≈ 39 Safety stock is about 9 units
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2 Fixed-Period (P) Systems þ Orders placed at the end of a fixed period þ Inventory counted only at end of period þ Order brings inventory up to target level þ Only relevant costs are ordering and holding þ Lead times are known and constant þ Items are independent from one another
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3 Fixed-Period (P) Systems On-hand inventory
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Unformatted text preview: Time Q 1 Q 2 Target maximum ( T ) P Q 3 Q 4 P P Figure 12.9 4 Fixed-Period Systems Inventory is only counted at each review period May be scheduled at convenient times Appropriate in routine situations May result in stockouts between periods May require increased safety stock Comparison of Q and P Systems P Systems Q Systems Convenient to administer Orders may be combined IP only required at review Individual review frequencies Possible quantity discounts Lower, less-expensive safety stocks...
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Probabilistic Example - Time Q 1 Q 2 Target maximum ( T ) P...

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