For convenience here, a network (NW) is defined when two or more stock holding facilities are connected with one entity. This is a distribution system with two or more locations. Could be a system with distribution centers (DC), or two or more retail outlets. The individual stocking locations are here referred as locations. The goal is to control the inventory for the NW and for each location. Typically, once a month at the NW, forecasts, standard deviation of the forecast error, and the planned order quantity are generated. Also, at each location, the forecast, standard deviation and order quantity are also needed to compute the order point and order level. At each location, the on-hand and on-order are observed and compared to the order point and order level to determine if a location needs a replenishment buy, and if so, how much. Sometimes the location buys directly with the supplier, and other times, the NW buys for the total system.
- Planned Order Quantity
- Order Point
- Standard deviationStandard Deviation
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