When is a model such as the economic lot sizing model which ignores randomness

When is a model such as the economic lot sizing model

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5. When is a model such as the economic lot sizing model, which ignores randomness, useful? 6. What are the penalties of facing highly variable demand? Are there any advantages?
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7. Give a specific example of risk pooling (a) across locations, (b) across time, and (c) across products. 8. When would you expect demand for a product in two stores to be positively correlated? When would you expect it to be negatively correlated? 9. Consider a supply chain consisting of a single manufacturing facility, a cross dock, and two retail outlets. Items are shipped from the manufacturing facility to the cross-dock facility and from there to the retail outlets. Let ?1 be the lead time from the factory to the cross-dock facility and ?2 be the lead time from the crossdock facility to each retail outlet. Let ?= ?1 + ?2. In the analysis below, we fix ?and vary ?1 and a. Compare the amount of safety stock in two systems, one in which lead time from the cross-dock facility to a retail outlet is zero (i.e., ?1 = ?Land ? 2. ).
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