MAN 4504 Lecture Notes - Lecture 18: Standard Deviation

• School: University of Florida
• Department: Management
• Course: MAN 4504
• Professor: Munson Adam B.

Document Summary

Stock that is kept to deal with uncertainty in both demand & lead time. If there is no uncertainty, then safety stock can be zero with no loss of customer service: probabilistic model & safety stock. These are used when demand is not constant or certain. Safety stock is used to achieve a desired service level & avoid stock outs: probabilistic demand. Used to prescribe service levels to set safety stock when the cost of stock outs cannot be determined. Rop = demand during lead time + number of standard deviations * Standard deviation of demand during lead time: other probalistic models. > only one order is placed for a product. > units have little or no value at the end of the sales period: fixed-period (p) systems. Such as the order up to model. Orders placed at the end of a fixed period. Inventory counted only at end of period. Order brings inventory up to target level.