Page 273 - DCOM303_DMGT504_OPERATION_RESEARCH

Operations Research

Notes Average Level (A.L.)

This level is the average of Mn. S.L. and Mx. S.L. and is given by

A.L. =

A.L. = Mn. S.L. + ½ of ROQ or EOQ

Theoretical representation of stock levels

MxL
ROL

MnL
DL
Buffer stock / Base stock / Safety stock
SS
Line of exhaustion
Portrayal of Stock Levels in Practice Line of replenishment

MxL
ROL

MnL

DL

When they are fit into a cylinder they are shown as under

MxL

MS Maximum Stock
RoL
ROQ Re-order quantity
MnL
MS Minimum Stock
DL
SS
Safety Stock

Example: Two components, A and B are used as follows:
Normal usage 50 units/week each

Minimum 25 units/week each
Maximum usage 75 units/week each

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