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Independent Demand Ordering Systems
Summary
This chapter addresses the problem of when to order whereas Chapter 10 addressed the problem of how much to order. Systems for ordering should be simple to use, such as an order point system or a periodic review system. Ordering systems need to order in time to avoid running out of stock. Statistical applications allow a prediction of the demand dur-ing the critical lead time to establish safety stocks. The order point uses this safety stock plus anticipated demand during the lead time to ensure acceptable service to the customer. Distribution systems can take advantage of MRP-type logic to optimize order quantities all the way through the supply chain. Inventory and ordering systems are all affected by the lead time; discussion of techniques of shortening the lead time is a subject of most of the chapters in this book.