Unformatted text preview: en Reorder Point Calculation
When the lead time is smaller than the cycle:
The order has to be ordered in advance of the end of a
cycle (lead time). In terms of on-hand inventory;
The reorder point R, is the product of the demand rate
and lead time.
R = λτ
λτ 8 Example 4.1 Reorder Point Calculation
When the lead time is larger than the cycle:
The lead time is larger than a single cycle.
Form the ratio τ/T
Consider only fractional remainder of the ratio.
Multiply this fractional remainder by the cycle length.
Multiply this result with demand rate to obtain the
reorder 9 Reorder Point Calculation for
Lead Times Exceeding One Cycle Sensitivity Analysis
Let G(Q) be the average annual holding and set-up cost
function given by G (Q) = K λ / Q + hQ / 2
and let G* be the optimal average annual cost. T...
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- Spring '14