Intermittent Demand Forecasting

8Inventory Settings

8.1 Introduction

In Chapter 2, we reviewed a number of inventory rules that may be used to manage the stock of intermittent demand items. We paid particular attention to the periodic review and policies. In both policies, the inventory position is reviewed every periods, and enough stock is ordered to raise it to the order‐up‐to (OUT) level () (also known as the OUT level). The difference between the two policies lies in the condition for triggering an order. In the system, the condition is that the inventory position falls at or below the order point, , whereas in the system, the condition is that the inventory position falls below the OUT level, . We noted that an ...