The economic order quantity Q* is equal to ffiffiffiffiffiffiffiffiffiffiffiffiffi 2SD=C p ; where D is the annual demand; S, the fixed cost per order; and C, the annual carrying cost per unit.
■ Probabilistic inventory control models require consideration of the possibility of stockouts. One approach used to handle this problem is to add a safety stock to the inventory.
■ Just-in-time inventory models are based on the concept that required inventory items are supplied exactly as needed by production. Successful implementation of just-in-time models can reduce inventory investment.L01