Triggering Replenishment
Each time a facility fulfills an order, it reduces its inventory of finished goods. Sooner or later, that inventory has to be replenished. Behind this self-evident truth lie three key questions:
When should inventory be replenished?
What quantity should be ordered with each replenishment?
How much inventory should be maintained on site?
The answers to these three questions constitute what is known as a replenishment policy. The first three sections of this chapter address the three questions in turn, starting with the question of when to place an order.
There are several options for deciding when to replenish inventory. One solution is simply to wait until the current inventory is exhausted. This practice is usually the ...
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