Order-Up-To Decision

Order-Up-To Level

The order-up-to level covers protection-period demand plus safety stock.

highlighted = computed this step

Protection demand

Protection-period demand is 18 units.

protection demand=18\text{protection demand}=18
Order-up-to decisionThe chart recomputes inventory position and the order quantity.order-up-to decisionS = 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

Add safety stock

Add safety stock of 5 units.

safety stock=5\text{safety stock}=5
Order-up-to decisionThe chart recomputes inventory position and the order quantity.order-up-to decisionS = 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

Order-up-to level

The order-up-to level is 23 units.

S=18+5=23S=18 + 5 = 23
Order-up-to decisionThe chart recomputes inventory position and the order quantity.order-up-to decisionS = 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