Consider the stock management system shown below. Sales rate depletes inventory, while production rate increases inventory. The
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Consider the stock management system shown below. Sales rate depletes inventory, while production rate increases inventory. The equations for the auxiliaries and the flow “Production Rate” are given below:
Production Rate = Inventory Shortfall/Time to Correct Inventory
Inventory Shortfall = (Desired Inventory – Inventory)
- Determine the equilibrium value of the stock (“Inventory”) in terms of other variables and parameters shown.
- When the system is in equilibrium, does Inventory equal its desired value? Yes? No?
- Suggest an alternative policy for production rate that assures Inventory equal its desired value in equilibrium (Hint: you need to modify the equation that you derived in A).
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