Description of Figure 11. Inventory Levels Under a Fixed Order Quantity-Variable Order Interval Policy

This schematic diagram shows the effects of two variables, Time on the x axis and Inventory Level on the y axis. The effects are illustrated for LT for Lead Time, R for Reorder Point, and Q for Order Quantity.

Horizontal line R parallels the x axis, beginning on the left at about one-fourth of the way up the y axis. A stair-stepped line that begins slightly above the midpoint on the y axis indicates Inventory Level. After a variable progressive descent, the inventory level crosses below the line indicating Reorder Point. That intersection is the beginning of the interval labeled Lead Time. The Inventory Level line continues to descend, reaching below the zero point on the y axis, which marks the beginning of another interval labeled Stockout.

At the end of the Stockout interval, the Inventory Level line ascends vertically, crossing the Reorder Point line to reach about half its original starting position on the y axis. That vertical ascent is labeled Q, Order Quantity. The horizontal stair-stepped line resumes a variable progressive descent. It again intersects the Reorder Point line, but not as deeply as the first drop. That intersection marks the beginning of a second Lead Time interval. The interval ends when the Inventory Line climbs vertically to a point greater than it began initially on the y axis. The horizontal stair-stepped Inventory Level line resumes a variable progressive descent.

For the third time, the Inventory Level line again intersects the Reorder Point line, beginning another Lead Time interval. When the line drops below the zero point on the y axis, a second Stockout interval begins. The Stockout interval ends when the Inventory Level line rises vertically, labeled Q, Order Quantity. The Order Quantity level is equivalent to the first Order Quantity level and less than the second Order Quantity level.