Stock Control and the Undershoot of the Re-order Level

Practical stock-control systems are frequently based on a policy of reviewing the stock balance and placing an order if this has fallen to or below a set level R. In order to facilitate the calculation of the control parameters, the assumption is generally made that the stock balance is exactly R when an order is placed, whereas in practice it may have fallen below R. This paper uses a steady-state analysis to evaluate some relatively simple adjustments which may be incorporated to handle this undershoot.