Inventory Control Guide Page 21
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40Random Demand
However, it can happen that the customers who cannot be served directly from the shelves,
do not wait but leave the shop. In this case, sales are lost.
D = 1, Q = 8, Lt = 5, R = 5
Inventory
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R
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Lost Sales
Random demand and positive lead time together induce the risk of shortage.
Random Demand:
Risk of Shortage / Stockout
In turn, the shortage induces backorders or lost sales.
Safety Stock (SS)
By building a safety stock, the risk of shortage is reduced, but not eliminated. Here is an
example with a safety stock of 1 unit. The next question then is "how much safety stock?"
D = 1, Q = 8, Lt = 5, R = 5 + 1= 6
Inventory
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Prod 2100-2110
Inventory Control
20
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