Is there a simple equation or way in which to determine what the minimum and maximum inventory levels should be in a hypothetical warehouse? What information must be known in order to determine the Kmin and Kmax inventory levels?

Is the determination if min/max inventory levels at all like determining the upper and lower control limits in statistics?

Please help....I need a good simple explanation and equation about calculating min/max inventory control levels?

Many thanks

M

Solution Preview

Hello,

Unfortunately, there is no simple equation to determine inventory levels. If it were that simple, one of the most difficult tasks in business, inventory planning, would be solved. I will assume this is a warehouse of finished goods. The first question is what service level do we promise our customers? If we promise them that 95% of the time when they place an order we can ship means something very different from 90% or 99%. So, say we promise them 95% of the time we will have their ordered item.

But now we need to understand the nature of the demand from our customers, assuming we have many. Do some customers order large amounts a few times or small amounts many times? Do others do the exact opposite? Is the product a seasonal one with, say, 80% being ordered from September to November for Christmas? Now, we also need to understand our products' life cycle profile. Are some products becoming obsolete and being phased out? Are others newly introduced to the market? Since your question included no information about product or customers, I need to make some assumptions. We will simplify and ignore all of this for the moment, which we could never do in real life.

Inventory exists for only two reasons - to serve as a cushion to match the vagueries of demand (the customer) and the vagueries of the supply (the suppliers). If supply could match demand prefectly as in a made-to-order (MTO) arrangement, then there would be no need to hold finished goods inventory. But what about components and assemblies? I will need to ignore that too, because even in a MTO environment you will still need to plan for this kind of inventory.

The vagueries of demand can be somewhat managed with excellent customer relationships, where the customer shares with you openly what their purchasing needs will be over the next 12 months. Since this is ...

Solution Summary

How to determine inventory levels and their min and max levels

Sample correlations for five stocks are given. Treating the sample correlations as similarity measures, cluster the stocks using the single linkage and complete linkage hierarchical procedures. Draw the dendrogram and compare the results.
JPMORGAN Citibank WellsFargo

Find the complete optimal solution to this linear programming problem.
Min 5X + 6Y
s.t. 3X + Y >= 15
X + 2Y >= 12
3X + 2Y >= 24
X,Y >=0
x=3,y=3,z=48,s1=6,s2=0,s3=0
x=6,y=3,z=48,s1=6,s2=0,s3=0
x=3,y=6,z=48,s1=3,s2=0,s3=0
x=6,y=3,z=52,s1=6,s2=0,s3=0
I think the correct answer is x=3,y=6,

Given: y = f(x) = 3x4 + 4x3
Find:
A. All critical points
B. Max - Min Values
C. Inflection points
D. Where is f(x) concave up
E. Where is f(x) concave down
F. X and Y intercepts
G. Where f(x) is increasing
H. Where f(x) is decreasing
I. Sketch the curve label

Locate the absolute extrema of the function on the closed interval. f(x) = -x^2 + 3x [0,3] [Answer is minimum at (0,0) and (3,0) and max at (3/2), 9/4)
Locate the absolute extrema of the function on the closed interval. g(t) = t^2/t^+ 3 [-1,1] Answer Min (0,0) Max (-1, 1/4) (1, 1/4)
Locate the absolute extre

1) Let f, g be defined on R and let c in R. Suppose that lim f = b and that g is continuous at b. Show that lim g 0 f = g(b)
Note:
R: real numbers
g 0 f means composition of f and g
2) Let A = [0, 1) U (1,2]. Let B = [0, 1] U [2, 3]. Does the conclusion of the maximum-minimum theorem always hold for a function f: A

Please see the attached file for the fully formatted problems.
f(x) = x^4 - 4x^3 + 10
a) Find f'(x) and f"(x).
b) Find all critical points and identify any local max/min.
c) Determine the intervals where f(x) is increasing or decreasing.
d) Find all possible points of inflections.
e) Determine the intervals whe

Please check the attached file for the network diagram
A network of railway lines connects the main lines entering and leaving a city. Speed limits, track reconstruction, and train length restrictions lead to the flow diagram below, where the numbers represent how many cars can pass per hour. What is the maximal flow in ca

The attachment for the question contains the top 100 hotel restaurants in the United States and the variables state, city, restaurant, hotel, cost (estimated price of dinner including one drink and tip), and ranking (1 to 100, with the 1 top rated restaurant).
Which Five Number Summary is correct for the Cost variable?
A.