cl18_Inventory_Management_II

What determines ss demand variability service level

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Unformatted text preview: e + SS With SS, will shortage still occur? What determines SS? – Demand variability – Service level = Probability of no stockout during lead time ti – Lead Time 14 What Determines Safety Stock? What Determines Safety Stock? Inventory L ROP L d L Service Level Distribution of of demand during lead time SS 15 What Determines Safety Stock? What Determines Safety Stock? Inventory L L d L Service Level Distribution of of demand during lead time ROP SS 16 How Much Safety Stock to Hold? How Much Safety Stock to Hold? Distribution of demand of demand during lead time Probability of no stockout during lead time (= service level) 0 Probability of stockout during lead time Quantity d L SS ROP 17 How How to Compute ROP for a Service Level? Case 1: Normally Distributed Demand Di Distribution of demand during lead time lead time Stdev = L Probability of no stockout during lead time lead time (= service level) 0 Probability of stockout during lead time ti Quantity dL SS ROP Service level = NORMSDIST(z) z = NORMSINV(service level) 18 SS = ______ ROP = _______ How to Compute How to...
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