Production and Operation Managements Inventory Control Subject to Unknown Demand Dr.Na GENG Department of Industrial Engineering Management Shanghai Jiao Tong University
Production and Operation Managements Dr. Na GENG Department of Industrial Engineering & Management Shanghai Jiao Tong University Inventory Control Subject to Unknown Demand
Inventory Control Subject to Unknown Demand Contents ·Introduction ·The newsboy model Lot Size-Reorder Point System Service Level in (Q,R)System Additional Discussion of Periodic-review Systems Multiproduct Systems
Inventory Control Subject to Unknown Demand Contents • Introduction • The newsboy model • Lot Size-Reorder Point System • Service Level in (Q, R) System • Additional Discussion of Periodic-review Systems • Multiproduct Systems
Additional Discussion of Periodic-review Systems (s,S)Policies It is difficult to implement a continuous-review solution in a periodic-review environment because the inventory level is likely to overshoot the reorder point R during a period,which makes it impossible to place an order the instant the inventory reaches R. Define two numbers,s and S,to be used as follows:When the level of on-hand inventory is less than or equal to s,an order for the difference between the inventory and S is placed
(s, S) Policies • It is difficult to implement a continuous-review solution in a periodic-review environment because the inventory level is likely to overshoot the reorder point R during a period, which makes it impossible to place an order the instant the inventory reaches R. • Define two numbers, s and S, to be used as follows: When the level of on-hand inventory is less than or equal to s, an order for the difference between the inventory and S is placed. Additional Discussion of Periodic-review Systems
Additional Discussion of Periodic-review Systems (s,S)Policies If u is the starting inventory in any period,then the(s,S)policy is √If u<s,order S-w, √Else,do not order. Approximation:to compute a(O,R)policy using the methods described earlier,and set s=R and S=R+O. This approximation will give reasonable results in many cases,and is probably the most commonly used
(s, S) Policies • If u is the starting inventory in any period, then the (s, S) policy is If u≤s, order S-u; Else, do not order. • Approximation: to compute a (Q,R) policy using the methods described earlier, and set s=R and S=R+Q. This approximation will give reasonable results in many cases, and is probably the most commonly used. Additional Discussion of Periodic-review Systems
Additional Discussion of Periodic-review Systems Service Level in Periodic-Review Systems ·Type 1 service 。 Objective-find the order-up-to point Q so that all of the demand is satisfied in a given percentage of the periods ·F(Q)=0, where F(Q)is the probability that the demand during the period does not exceed Q
Service Level in Periodic-Review Systems • Type 1 service • Objective-find the order-up-to point Q so that all of the demand is satisfied in a given percentage of the periods • F(Q)= , where F(Q) is the probability that the demand during the period does not exceed Q. Additional Discussion of Periodic-review Systems