Page 267 - DMGT501_OPERATIONS_MANAGEMENT

Unit 11: Inventory Model

4. ........................ systems are designed to ensure that an item will be available on an ongoing Notes
basis throughout the year
5. The basic difference between the two systems is that the fixed-order quantity models are

“event triggered” and fixed time period models are ........................ .

6. Fixed orders are placed at the end of ........................ time periods.
7. The most common way to estimate demand is to collect data about past experience and
........................ based on that data.

8. The ........................ has been found to provide a reasonable fit when demand is very low
9. The ........................ can also be used to set buffer stocks for the allowable number of stock
outs per year.

10. The expected number of stock outs for a ........................ is found by multiplying the number
of orders in a year (D/Q) times the probability of a stock out.

11.7 Review Questions

1. Define different types of inventory models.
2. Discuss uncertainty in demand and lead time.

3. What do you know about the Christmas Tree problem?

4. Illustrate the models with specified service levels.
Answers: Self Assessment

1. Optimal stocking level 2. Inventory models
3. Single-period inventory 4. Multi-period inventory

5. “time triggered.” 6. Predetermined
7. forecast future demand 8. Poisson distribution
9. complementary cumulative function 10. demand level

11.8 Further Readings

Jones, T.C., and Riley, D.W., 1985, Using Inventory for Competitive Advantage through
Supply Chain Management, International Journal of Physical Distribution and
Materials Management 19(8), 3-8.
Krajewski and Ritzman, Operations Management, Strategy and Analysis, Pearson
Education, 2002.

Melnyk, S. and D. Denzler, Operations Management: A Value Driven Approach,
McGraw-Hill, 1996.
Vonderembse, Mark, White, Gregory, Operations Management, Concepts, Methods
and Strategies, John Wiley & Sons, 2004.

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