American Aerospace produces military jet engines. Frequent shortages of one critical part has been causing delays in the production of the most popular jet engine, so a new inventory policy needs to be developed for this part. There is a long lead time between when an order is placed for the part and when the order quantity is received. The demand for the part during this lead time is uncertain, but some data are available for estimating its probability distribution. In the future, the inventory level of the part will be kept under continuous review. Decisions now need to be made regarding the inventory level at which a new order should be placed and what the order quantity should be.

  • CreatedSeptember 22, 2015
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