Switching to Period Inventory Model: Determining T and Ireq
Factors in Determining T:
Demand Characteristics: The store needs to consider the daily demand distribution, mean, and standard deviation to calculate the time between orders accurately.
Lead Time: Understanding the lead time is crucial in determining how often orders should be placed to meet customer demand without stockouts.
Desired Service Level: The store must establish the level of service it aims to provide to customers, which affects the frequency of ordering.
Factors in Determining Ireq:
Desired Service Level: The store needs to define the service level it wants to achieve to ensure customer satisfaction.
Demand Characteristics: Considering the normal distribution of daily demand is essential to calculate the safety stock needed.
Lead Time: Understanding the time between placing an order and receiving inventory is crucial in setting the reorder point.