p. The two classic systems for managing independent demand inventory are periodic review and perpetual review systems. This section focuses on the Perpetual System.
Inventory level is constantly monitored and a new order place when a pre-established reorder point R is met
As the order quantity doubles so does average inventory (= Q/2)
- Inventory related costs
- Order preparation costs / setup costs
- Inventory carrying costs
- Shortage & customer service costs
- Other considerations
- Out of pocket or opportunity cost?
- Fixed, variable, or some mix of the two?