ABSTRACT
In the nineteenth century, stores systems used to include 'minimum' and 'maximum' stock levels for control. The review level is triggered when analysis of historical demand shows that stock is low and the controller then decides whether to order. As demand is uncertain, sometimes there will be stock-outs, and the likelihood has been set by choosing the availability level. If the demand level or supply lead time is changing, the first action is to change the review level. Lead time is the time between a shortage occurring and items being available to maintain supply to customers. Lead times for purchasing result from production and transport times, whereas lead times for manufacturing result from capacity, material availability and production planning. Long lead times and large batch supply produce an order pattern which is irregular and subject to change. The longer the lead time, the wider the absolute variation in demand and the higher the safety stock for a given service level.
