Operations Research, Systems Engineering and Industrial Engineering Commons^™

Optimizing The Safety Stock Inventory Cost Under Target Service Level Constraints, Chetan T. Shivsharan

Masters Theses 1911 - February 2014

The level of customer satisfaction largely depends on manufacturer’s ability to respond to customer orders with promptness. The swiftness with which the manufacturers are able to meet customer demand is measured by the service level. There are two service level measures typically used. The first one is type 1 service level which denotes the probability of not stocking out over a planning period. The other is fill rate which denotes the proportion of demand satisfied with the existing inventory. We review the rich and diverse literature available on inventory cost optimization under these service level constraints. Subsequently two optimization models …