Zero Order and Scope

Honest Periodic-Review Scope

The final lesson states the boundary: this is deterministic periodic-review arithmetic.

highlighted = computed this step

Exact rule

The exact rule orders up to S after each review.

order up to S=23\text{order up to }S=23
Zero-order capThe chart shows that order quantity is capped at zero when position is already above S.zero-order capS = 18 + 5 = 23protection periodreview 4 dayslead 2 daysprotection demand 3 x 6 = 18inventory position and order quantitysnapshoton handon orderbackorderspositionqdecisionsnapshot7401112order 12position high2500250order 0q = max(S - position, 0)deterministic demand and lead time only

Constant inputs

The model assumes constant demand rate and constant lead time over the protection period.

fixed protection period=6\text{fixed protection period}=6
Zero-order capThe chart shows that order quantity is capped at zero when position is already above S.zero-order capS = 18 + 5 = 23protection periodreview 4 dayslead 2 daysprotection demand 3 x 6 = 18inventory position and order quantitysnapshoton handon orderbackorderspositionqdecisionsnapshot7401112order 12position high2500250order 0q = max(S - position, 0)deterministic demand and lead time only

Not modeled

It does not model stochastic service levels, variable demand, variable lead time, or lost sales.

outside scope: uncertainty and lost sales\text{outside scope: uncertainty and lost sales}
Zero-order capThe chart shows that order quantity is capped at zero when position is already above S.zero-order capS = 18 + 5 = 23protection periodreview 4 dayslead 2 daysprotection demand 3 x 6 = 18inventory position and order quantitysnapshoton handon orderbackorderspositionqdecisionsnapshot7401112order 12position high2500250order 0q = max(S - position, 0)deterministic demand and lead time only

Honesty note

This is deterministic periodic-review arithmetic only. It does not model stochastic service levels, variable demand, variable lead time, or lost sales.

deterministic periodic-review arithmetic only\text{deterministic periodic-review arithmetic only}
Zero-order capThe chart shows that order quantity is capped at zero when position is already above S.zero-order capS = 18 + 5 = 23protection periodreview 4 dayslead 2 daysprotection demand 3 x 6 = 18inventory position and order quantitysnapshoton handon orderbackorderspositionqdecisionsnapshot7401112order 12position high2500250order 0q = max(S - position, 0)deterministic demand and lead time only