Integral stock norms in divergent systems with lot-sizes (Q911979)

Integral stock norms and service levels are studied for divergent systems in which a common part goes into several final products. A number of one and two stage systems are considered and integral stock norm formulae are derived. The size of imbalance and its importance are investigated both for systems with and without depot. A simple rule is postulated namely that the positive effect of decreased imbalance in case a depot is present is small compared with the negative effect of decreased ability to satisfy customers' demand. An exception to this rule is in the case of systems with a large lot-size for the common component combined with large coefficients of variation for the final products' demand.