Switching to Period Inventory Model: Determining T and Ireq

What factors need to be considered when determining T and Ireq in a period inventory model?

Factors in Determining T:

Demand Characteristics: The store needs to consider the daily demand distribution, mean, and standard deviation to calculate the time between orders accurately.

Lead Time: Understanding the lead time is crucial in determining how often orders should be placed to meet customer demand without stockouts.

Desired Service Level: The store must establish the level of service it aims to provide to customers, which affects the frequency of ordering.

Factors in Determining Ireq:

Desired Service Level: The store needs to define the service level it wants to achieve to ensure customer satisfaction.

Demand Characteristics: Considering the normal distribution of daily demand is essential to calculate the safety stock needed.

Lead Time: Understanding the time between placing an order and receiving inventory is crucial in setting the reorder point.

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