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Keywords:

  • Operations Management;
  • Spreadsheet Modeling;
  • Student Learning;
  • Supply Chain Management

ABSTRACT

This teaching brief describes a method for finding an approximately optimal combination of order quantity and reorder point in a continuous review inventory model using a discrete expected shortage calculation. The technique is an alternative to a model where expected shortage is calculated by integration, and can allow students who have not had a calculus-based statistics course to better understand how uncertainty affects inventory decisions.