⑧ ntroduction As almost all inventory management refers to some level of uncertainty,what is the value of the deterministic inventory control model? Provide a basis for understanding the fundamental trade-offs encountered in inventory management; May be good approximations depending on the degree of uncertainty in the demand
Introduction As almost all inventory management refers to some level of uncertainty, what is the value of the deterministic inventory control model? • Provide a basis for understanding the fundamental trade-offs encountered in inventory management; • May be good approximations depending on the degree of uncertainty in the demand
Introduction Let D be the demand for an item over a given period of time.We express it as the sum of two parts Dpet and Dran D=DDet+DRam In many cases D~DDet even DRam0: When the variance of the random component,DRam is small relative to the magnitude of Dpet: When the predictable variation is more important than random variation; When the problem is too complex to include an explicit representation of randomness in the model
Introduction Let D be the demand for an item over a given period of time. We express it as the sum of two parts DDet and Dran: D=DDet+DRam In many cases DDDet even DRam0: • When the variance of the random component, DRam is small relative to the magnitude of DDet； • When the predictable variation is more important than random variation; • When the problem is too complex to include an explicit representation of randomness in the model