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Inventory optimizaiton

Define, deterministic, stochastic, multiperiod, and multiechelon
Provide the benefits and drawbacks to each,
Which methodology should be used by SBS and by MLD ?

Scenario: The first client, SBS Seating, manufactures front seats for several major car manufacturers, while the second is MLD Hospital's Diagnostic Medicine unit.
SBS Seating manufactures leather seating that consists of various components, such as frames; electrical parts (heating and comfort features); padding; and leather sewing (final assembly). Each of these components is developed at separate locations, and the final assembly is done at the main plant.
MLD Hospital's Diagnostic Medicine unit is primarily responsible for processing patients' blood work. Patients are directed to one or more collection offices where blood is drawn, and then the blood is sent to various other departments depending on the test

Solution Preview

Deterministic inventory optimization means that every set o variable states is uniquely determined by the parameters in the model. The benefit if the deterministic model is that there is no randomness in the development of future states of the system. A deterministic model will always produce the same output from a given starting condition or initial state. The drawback is this system is not appropriate for an environment where there is volatility.

Stochastic inventory optimizations means the variable states are described by a probability distribution. The benefit of the stochastic system is that it takes supply uncertainty into account. It also takes into ...

Solution Summary

The answer to this problem explains inventory optimization techniques . The references related to the answer are also included.