Section 1 Overview of Text
Section 1 Overview of Text
The next set of sections in this part relax the assumption of deterministic demand as well as that
of deterministic reorder lead time. Section 9 presents a model to determine an appropriate
reorder to trigger a replenishment order for backorder and lost sales scenarios. In Section 10, the
assumption of an information system that provides continuous review of the inventory status is
changed to the more restrictive periodic review case. Section 11 addresses the single period
problem more commonly known as the News Vendor or News Boy problem.
Section 12 again assumes a known constant demand rate but considers the case where a single
production resource must produce a set of products. In this case, the sequence and duration of
production runs is the output of the model presented. In Section 13, a single product is again
assumed but the demand is no longer considered stationary. Instead a forecast of the upcoming
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SECTION 1 January 5, 2017
horizon is used and an optimal approach to determine when to produce given some fixed setup
cost each time a production run is made.
The last two sections provide an overview of software systems to support production control,
inventory and scheduling is real systems including MRP and ERP systems (Section 14) and the
philosophy behind Just-in-Time production systems is described in Section 15.
1.5 Appendices
Five appendices are provided. Appendix I is a reprint of paper published in APICS – The
Performance Advantage which describes a problem prevalent in American industry that is caused
by executive incentive systems. Appendix II is a Standard Normal table for convenience in
solving homework and test problems. Appendix III provides Leibnitz’s Formula for
differentiating an integral and Appendix IV shows a formula for computing the expected number
of stock outs (or lost sales) when the demand distributed can be reasonably assumed to be
Normally distributed. Finally, Appendix V describes five useful properties of the Exponential
distribution.
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