Premium
COMMENTS ON “COST INCREASES DUE TO DEMAND UNCERTAINTY IN MRP LOT SIZING”: A VERIFICATION OF ORDERING PROBABILITIES
Author(s) -
Wemmerlüv Urban
Publication year - 1985
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1985.tb01492.x
Subject(s) - sizing , computer science , aggregate (composite) , order (exchange) , operations research , mathematical optimization , econometrics , industrial engineering , economics , mathematics , engineering , art , materials science , finance , composite material , visual arts
In a recent article in this journal, De Bodt and Van Wassenhove [1] presented analytic derivations related to lot‐sizing behavior under uncertainty. Although their models appear to have been verified in the aggregate by simulation experiments, detailed justifications for several of the derivations are missing. The present paper looks at De Bodt and Van Wassenhove's analysis and provides verifications of (and corrections to) the ordering probabilities and order cycles used by the authors to estimate the cost effects of forecast errors in the particular operating environment studied. The probabilities simulated in this study also generate additional insight into the “system nervousness” caused by lot‐sizing and forecast errors.