Probabilistic Example

Probabilistic Example - Time Q 1 Q 2 Target maximum T P Q 3...

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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 þ Inventory is only counted at each review period þ May be scheduled at convenient times þ Appropriate in routine situations þ May result in stockouts between periods þ 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 Q 3...

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