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Z-Chart & Loss Function v05

The document discusses Z-charts and loss functions used in inventory management. A Z-chart shows the z-value (Z) corresponding to the service level or probability (F(Z)) that demand will be met from inventory. The loss function (L(Z)) gives the expected fraction of demand that will be lost or backordered for a given Z-value. Specific common service level targets like 75%, 90%, 95%, and 99% are listed along with their corresponding Z-values and L(Z) values.

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Malvin Vito
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560 views1 page

Z-Chart & Loss Function v05

The document discusses Z-charts and loss functions used in inventory management. A Z-chart shows the z-value (Z) corresponding to the service level or probability (F(Z)) that demand will be met from inventory. The loss function (L(Z)) gives the expected fraction of demand that will be lost or backordered for a given Z-value. Specific common service level targets like 75%, 90%, 95%, and 99% are listed along with their corresponding Z-values and L(Z) values.

Uploaded by

Malvin Vito
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Z-Chart & Loss Function

F(Z) is the probability that a variable from a standard normal distribution will be less than or equal to Z, or
alternately, the service level for a quantity ordered with a z-value of Z.

L(Z) is the standard loss function, i.e. the expected number of lost sales as a fraction of the standard
deviation. Hence, the lost sales = L(Z) x DEMAND

Z F(Z) L(Z) Z F(Z) L(Z) Z F(Z) L(Z) Z F(Z) L(Z)


-3.00 0.0013 3.000 -1.48 0.0694 1.511 0.04 0.5160 0.379 1.56 0.9406 0.026
-2.96 0.0015 2.960 -1.44 0.0749 1.474 0.08 0.5319 0.360 1.60 0.9452 0.023
-2.92 0.0018 2.921 -1.40 0.0808 1.437 0.12 0.5478 0.342 1.64 0.9495 0.021
-2.88 0.0020 2.881 -1.36 0.0869 1.400 0.16 0.5636 0.324 1.68 0.9535 0.019
-2.84 0.0023 2.841 -1.32 0.0934 1.364 0.20 0.5793 0.307 1.72 0.9573 0.017
-2.80 0.0026 2.801 -1.28 0.1003 1.327 0.24 0.5948 0.290 1.76 0.9608 0.016
-2.76 0.0029 2.761 -1.24 0.1075 1.292 0.28 0.6103 0.274 1.80 0.9641 0.014
-2.72 0.0033 2.721 -1.20 0.1151 1.256 0.32 0.6255 0.259 1.84 0.9671 0.013
-2.68 0.0037 2.681 -1.16 0.1230 1.221 0.36 0.6406 0.245 1.88 0.9699 0.012
-2.64 0.0041 2.641 -1.12 0.1314 1.186 0.40 0.6554 0.230 1.92 0.9726 0.010
-2.60 0.0047 2.601 -1.08 0.1401 1.151 0.44 0.6700 0.217 1.96 0.9750 0.009
-2.56 0.0052 2.562 -1.04 0.1492 1.117 0.48 0.6844 0.204 2.00 0.9772 0.008
-2.52 0.0059 2.522 -1.00 0.1587 1.083 0.52 0.6985 0.192 2.04 0.9793 0.008
-2.48 0.0066 2.482 -0.96 0.1685 1.050 0.56 0.7123 0.180 2.08 0.9812 0.007
-2.44 0.0073 2.442 -0.92 0.1788 1.017 0.60 0.7257 0.169 2.12 0.9830 0.006
-2.40 0.0082 2.403 -0.88 0.1894 0.984 0.64 0.7389 0.158 2.16 0.9846 0.005
-2.36 0.0091 2.363 -0.84 0.2005 0.952 0.68 0.7517 0.148 2.20 0.9861 0.005
-2.32 0.0102 2.323 -0.80 0.2119 0.920 0.72 0.7642 0.138 2.24 0.9875 0.004
-2.28 0.0113 2.284 -0.76 0.2236 0.889 0.76 0.7764 0.129 2.28 0.9887 0.004
-2.24 0.0125 2.244 -0.72 0.2358 0.858 0.80 0.7881 0.120 2.32 0.9898 0.003
-2.20 0.0139 2.205 -0.68 0.2483 0.828 0.84 0.7995 0.112 2.36 0.9909 0.003
-2.16 0.0154 2.165 -0.64 0.2611 0.798 0.88 0.8106 0.104 2.40 0.9918 0.003
-2.12 0.0170 2.126 -0.60 0.2743 0.769 0.92 0.8212 0.097 2.44 0.9927 0.002
-2.08 0.0188 2.087 -0.56 0.2877 0.740 0.96 0.8315 0.090 2.48 0.9934 0.002
-2.04 0.0207 2.048 -0.52 0.3015 0.712 1.00 0.8413 0.083 2.52 0.9941 0.002
-2.00 0.0228 2.008 -0.48 0.3156 0.684 1.04 0.8508 0.077 2.56 0.9948 0.002
-1.96 0.0250 1.969 -0.44 0.3300 0.657 1.08 0.8599 0.071 2.60 0.9953 0.001
-1.92 0.0274 1.930 -0.40 0.3446 0.630 1.12 0.8686 0.066 2.64 0.9959 0.001
-1.88 0.0301 1.892 -0.36 0.3594 0.605 1.16 0.8770 0.061 2.68 0.9963 0.001
-1.84 0.0329 1.853 -0.32 0.3745 0.579 1.20 0.8849 0.056 2.72 0.9967 0.001
-1.80 0.0359 1.814 -0.28 0.3897 0.554 1.24 0.8925 0.052 2.76 0.9971 0.001
-1.76 0.0392 1.776 -0.24 0.4052 0.530 1.28 0.8997 0.047 2.80 0.9974 0.001
-1.72 0.0427 1.737 -0.20 0.4207 0.507 1.32 0.9066 0.044 2.84 0.9977 0.001
-1.68 0.0465 1.699 -0.16 0.4364 0.484 1.36 0.9131 0.040 2.88 0.9980 0.001
-1.64 0.0505 1.661 -0.12 0.4522 0.462 1.40 0.9192 0.037 2.92 0.9982 0.001
-1.60 0.0548 1.623 -0.08 0.4681 0.440 1.44 0.9251 0.034 2.96 0.9985 0.000
-1.56 0.0594 1.586 -0.04 0.4840 0.419 1.48 0.9306 0.031 3.00 0.9987 0.000
-1.52 0.0643 1.548 0.00 0.5000 0.399 1.52 0.9357 0.028

Z & L(z) for special service levels


Service Level F(z) z L(z)
75% 0.67 0.150
90% 1.28 0.047
F(Z) = 95% 1.64 0.021
Service Level 99% 2.33 0.003

0
Z
z z-scale

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