2 Flashcards
1
Q
Cycle Service level
A
% of cycles that are fulfilled completely, measured with z
2
Q
Fill rate
A
% of total demand fulfilled by stock on hand
3
Q
Single period model variables c p v s D Q
A
c = variable cost p = price you sell at v = salvage value s = shortage cost D = demand per time period Q = optimal order quantity
4
Q
Base stock policy
Order-up-to policy
Definition
notations
A
(S-1, S) (no fixed cost to order)
s, S) (fixed cost to order
5
Q
Coefficient of variation formula
gives relative measure of variability
A
STD / demand
6
Q
Risk pooling best when
A
High coefficient of variation (STD / demand)
Demand at different warehouse negative correlated
7
Q
Square root law of risk pooling
A
Aggregation of demand reduces safety inventory by
sqrt (k), where k = % of geographic locations that are independent and similar size
