#### Transcript of Periodic Review Systems

**M Sc. Luis Jesús Pérez Rivera**

MSc.ljperez@gmail.com

**Periodic Review Systems**

(S,T) model

S: Inventory target level

T: Revision Period Length

In each revision if the positional inventory (Xt) is less than S, an order for Q=S-Xt units is issued

Xt=It+Ot-Bt (Positional = In hand + On transit - backorder)

ASSUMING normality...

in stock probability

out of stock probability

S

is the (1-alpha) percentile of the RLTD, despite the probability distribution type.

a) By convenience (once a month, every Friday, etc.)

or

b) Analizing the model from the EOQ perspective yields the formula*:

* Assuming a deterministic lead-time smaller than the revision period length.

Revision period setting

The same policies apply to both continuous and periodic review systems:

a) In-Stock probability

b) Fillrate

Assuming normality:

Service level policies

Jones, the owner of a a coffee shop, estimates the annual demand for certain kind of coffee bean is normally distributed with a mean of 240 lb and a std. deviation of 32 lb. The lead time is 0.5 months. Jones adopts a periodic review policy (S,T) to control the inventory, with a revision period length of 1 month. He wants to calculate the inventory target with each service level policy @ 95%.

Optional replenishment system (s,S)

Often called min-max system.

The test is done using the on-hand inventory rather than the positional inventory.

Two inventory levels are defined

s

and

S

.

The review interval is

T

.

Full transcript