MGCR 472 Lecture Notes - Lecture 10: Standard Deviation, University Of Florida, Cumulative Distribution Function
6 Apr 2016
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Two main issues to address 1) how much to order, q* 2) when to order, rop. Be careful about the time units (d and h must be in same time units). Cycle time = average time between orders = q*/d. Rop = mean lead time demand + safety stock z. Rop = mean of the lead time demand + z * standard deviation of lead time demand stock safety. How to calculate the mean lead time demand ltd, and stndrd deviation of the lead time demand, ltd. Note that the demand information may be in different time units then lead time (in that case we need to make a conversion). Let the lead time be given in weeks. Lt: standard deviation of lead time (in weeks) d: average weekly demand. If the demand is normally distributed then we can use the following formulas; 2 z will be determined by annual service level (asl; also called fill rate)
