Inventory management models (part 1)

For the purpose of this article, some simple models used for measuring the order size and level of supply are reviewed.

The degree of applicability of those varies relying on the dependence of demand and supply use. Dependent demand means that the produced item makes up a part of a bigger assembly or product, and its use depends on production schedule of the bigger part.

Independent demand means that the use of storage unit is not determined by production schedule, and is directly related to customers’ orders which are coming independently on production schedule.

In this article the easiest way of inventory management is considered: the model with fixed order quantity