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0 3 h66 Mitchell (1962) has also developed indifference curves as shown in Fig. 10.4. An indifference curve is one where all the points lying on the curve have the same utility value. For example, all the points lying on the line 0-H in Fig. 10.4 have the same utility value in this case, have the same cost, Cn). Similarly, all the points lying on C=C2(represented by other diagonal lines in Fig. 10.4) have the same costs. It is noticed that C1 =C2 is a function of lead time, and hence there would be one curve for each value of lead time, for C, =C2. Figure 10.4 shows indifference curves for various values of lead times (L=1,2,3,4,5,6,12 and 18 months). When the values of lead time, demand, cost of holding, and stockout are known, the following decision rules may be used. The ratio of stockout to holding costs. and the demand for the spare, D, correspond to a point in the graph. Depending on where this point lies on the graph, Table 10.2 presents decision rules that would help determine the number of spares that need to be held initially in the inventory. The order size is always I. Consider the data provided in Solved Problem 10.3. Use the graphical method to determine the initial number of spares that need to be maintained in the stores