Difference between p system and q system of inventory system
Asked by admin @ in Social Sciences viewed by 258 People
Difference between p & q systems of inventory planning
Answered by admin @
FIXED ORDER INTERVAL SYSTEM OR P-SYSTEM
· Inventory position is monitored at discrete point in time
· Once an order is placed at time t, another order can not be placed until (t + T), and the
second order will not be filled until the lead time period has elapsed, at (t + T + L)
· Thus safety stock protection is needed for the lead-time L plus the order interval T
· In the fixed order size system, safety stock is needed only for the lead-time period,
because the inventory position is monitored with each transaction
· In the fixed order size system, a higher than normal demand causes a shorter time
between orders whereas in the fixed order interval system, the result would be a larger
order size
· Predetermined inventory level (E)
E = S + RT + LR
Where S is the safety stock considering demand variation during (T + L)
period and (RT + LR) is the average demand during (T + L) period · The order interval (T) 2
0 = =
HR
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