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Page 1: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-1McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Page 2: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-2McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter Five

Inventory Control Subject Inventory Control Subject to Uncertain Demandto Uncertain Demand

Page 3: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-3McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Frequency Histogram for a 52-week History of Sales of

The Computer Journal at Mac’s

Fig. 5-1

Page 4: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-4McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Frequency Histogram and Normal Approximation

Fig. 5-2

Page 5: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-5McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Expected Cost Function for Newsboy Model

Fig. 5-3

Page 6: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-6McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Determination of the Optimal Order Quantity for Newsboy Example

Fig. 5-4

Page 7: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-7McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Changes in Inventory Over Time for Continuous-Review (Q, R) System

Fig. 5-5

Page 8: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-8McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Expected Inventory Level for (Q, R) Inventory Model

Fig. 5-6

Page 9: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-9McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Pareto Curve: Distribution of Inventory by Value

Fig. 5-7

Page 10: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-10McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Exchange Curve of Replenishment Frequency and Inventory Value

Fig. 5-8

Page 11: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-11McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Exchange Curve of the Investment in Safety Stock and

Fig. 5-9

Page 12: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-12McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Exchange Curve:Harvey’s Specialty Shop

Fig. 5-10

Page 13: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-13McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Typical Three-Level Distribution System

Fig. 5-11

Page 14: 5-1. 5-2 Chapter Five Inventory Control Subject to Uncertain Demand.

5-14McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Typical Three-LevelAssembly System

Fig. 5-12