The Effect of the Supply Accuracy on the Inventories

Abstract

Our theories applied in the case of the economic order quantity are influenced by the fact that disturbances can occur in our internal and external processes that together create an uncertainty regarding the arrival date of purchased parts and the development of the stock level. By walking around the continuous review model during our analysis, we will present the relations between the fluctuation of supply accuracy and the safety stocks, and we will define the formula for the quantification of the safety stock. The definition of the service level provides an opportunity to handle the fluctuation of replenishment period with a predetermined safety, and to quantify the stock level required for the operation.