Inventory management of a spare parts dealer for technical equipment

Target inventory management with lead times

Lead time 4
Average demand per week 50
Standard deviation per week 10
Service level 95%

To what target inventory level should the retailer restock this product?

Z-value at service level 1.64

Average demand within LT+1 250
Average standard deviation within LT+1 22
Target inventory 287

How does the physical inventory at the end of each week develop?

Pipeline
Physical inventory
inventory (Open Inventory Order
Week at begin of week orders) Position quantity
1 287 0 287 0
2 220 0 220 67
3 179 67 246 41
4 117 108 225 62
5 52 170 222 65
6 -17 235 218 69
7 12 237 249 38
8 8 234 242 45
9 6 217 223 64
10 23 216 239 48
11 34 195 229 58
12 34 215 249 38
13 22 208 230 57
14 31 201 232 55
15 25 208 233 54
16 38 204 242 45
17 30 211 241 46
18 36 200 236 51
19 10 196 206 81
20 13 223 236 51
weeks
units
units

Orders Fulfill Physical

received from demand inventory
week-LT in week at end of week
0 67 220
0 41 179
0 62 117
0 65 52
0 69 -17
67 38 12
41 45 8
62 64 6
65 48 23
69 58 34
38 38 34
45 57 22
64 55 31
48 54 25
58 45 38
38 46 30
57 51 36
55 81 10
54 51 13
45 49 9