
189An Application of an Inventory Model for Production Planning
In terms of raw material planning, the base stock model is used to guar-
antee that there will always be raw materials available whenever they are
needed in production. The base stock level is determined by the nished
goods production lot size and the expected ratio of production cycle time to
procurement lead time. If the ratio is greater than 1, then the raw material
base stock value should be enough for one nished goods production lot
size. Otherwise, it means that the procurement lead time is greater than the
average cycle time; the base stock value then should be greater th ...