Question

What is the effect on the amount of safety stock provided by the stochastic continuous-review model presented in Sec. 18.6 when the following change is made in the inventory system? (Consider each change independently.)
(a) The lead time is reduced to 0 (instantaneous delivery).
(b) The service level (measure 1) is decreased.
(c) The unit shortage cost is doubled.
(d) The mean of the probability distribution of demand during the lead time is increased (with no other change to the distribution).
(e) The probability distribution of demand during the lead time is a uniform distribution from a to b, but now (b  a) has been doubled.
(f) The probability distribution of demand during the lead time is a normal distribution with mean μ and standard deviation σ, but now σ has been doubled.


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  • CreatedSeptember 22, 2015
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