3. Inventory Control

This chapter focuses on explaining inventory control1 processes and the effect of uncertainty in these processes. In inventory control, we have uncertainty in demand, lead time, and sometimes the review interval itself. When we place an order, if demand spikes, we might stockout before the inventory arrives. On the other hand, demand might be steady while lead time takes longer than expected, possibly resulting in a stockout.2 The fact is, there is uncertainty in both demand and lead time and that has a significant impact on the overall performance of an inventory control system. In addition to uncertainty in demand and lead time, there is uncertainty in execution of tasks involved in the inventory process, but we do not ...

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