The Power of Prediction

Abstract:Quality in service parts management means availability without excess inventory. Low-volume demand can cause excess and obsolete inventory write-offs. Considerable work has been done in applying statistical inventory stocking models to the service parts situation. SUch statistical models allow for the determination of safety stock to load into the material requirements planning (MRP) system to achieve a targeted service level. Experience has shown, though, that the actual service level achieved consistently runs a few percentage points lower than that suggested by statistical theory. This is evidently because the statistical models have presumed that a supply order placed at the supplier lead time would always arrive on time. This is simply not reality. The article examines how the statistical models for the determination of safety stock can be expanded to incorporate supplier delivery …

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Very good article. Moved well through technical analysis and flowed well. Right level of detail and overview for this type of publication.
--JD Solomon, 06-07-2013


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