Understanding the (S, s-1) Inventory Policy

What This Article Covers

  • Muckstadt and the (S,s-1) Inventory Policy
  • What is S?
  • What is s?
  • (S,s-1) as a Specialized Form

Introduction

In several articles previous, the (S, s-1) inventory policy is discussed.

For this reason, it made sense to create an article which explains what it does, and how it can be used to improve inventory management.

The following was written by Wayne Fu.

Muckstadt and the (S,s-1) Inventory Policy

In Muckstadt’s book, section 1.1.2, it explains briefly about the (s, sS) inventory policy.

  1. Sis the normal reorder point
  2. S is the order up to level

When inventory position (which is on hand plus on-order minus backorder) falls to or below s, it triggers an order to raise the inventory position to S.

(S,s-1) as a Specialized Form

  • (S, s-1) is just a specialized form of (s, S).
  • Basically, it is s-1 only. In section 1.2, Muckstadt states the fundamental assumption of his model.
  • He assumes the costs of parts are high enough to be managed by (S, s-1) policy. (S, s-1) is an ordering policy says if the inventory level is one below (S-1), place an order to bring inventory level to S.

It is very commonly used in long lead-time environments such as aerospace.

Author Thanks

I wanted to thank Wayne Fu for his contribution. I was not aware of many of the details which are described above, and I think this should be of interest to anyone who practices in this field.

Author Profile

Wayne Fu is a Senior Product Management in Servigistics.With operation management background, Wayne has worked in service part planning domain for more than a decade. In Servigistics, he led the research and development of various areas like install-base (provisioning) forecasting, inventory optimization, and distribution planning. Currently, he is focusing on the effectiveness of forecast techniques in Last Time Buy.

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References

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