Question: Beyond qualitative observations, the ( Q , R ) system offers some quantitative insight into the factors that affect the optimal stocking policy. ( Example

Beyond qualitative observations, the (Q, R) system offers some quantitative insight into the factors that affect the optimal stocking policy. (Example) Increasing the average annual demand tends to increase or decrease the optimal order quantity Q. For a given replenishment frequency, if customer service remains fixed (at a sufficiently high level), then the higher or lower the variability (i.e., standard deviation of demand or replenishment lead time), the more inventory we must carry.

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