Understanding the (S, s-1) Inventory Policy


In several articles distributed across different SCM Focus sites, the (S,s-1) inventory policy is discussed. For this reason, it made sense to create an article which explains what it does. The following was written by Wayne Fu.


In Muckstadt’s book, section 1.1.2, it explains briefly about the (s,S) policy.

  1. s is normally the reorder point
  2. S is the order up to level

When inventory position (which is on hand plus on-order minus backorder) falls to or below s, it triggers an order to raise the inventory position to S.

And (S,s-1) is just a specialized form of (s,S).  Basically it is s-1 only. In section 1.2, Muckstadt states the fundamental assumption of his model. He assumes the costs of parts are high enough to be managed by (S, s-1) policy. (S,s-1) is an ordering policy basically says if the inventory level is one below (S-1), place an order to bring inventory level to S.

It is very commonly used in long lead-time environments such as aerospace.

Author Thanks
I wanted to thank Wayne Fu for his contribution. I was not aware of many of the details which are described above, and I think this should be of interest to anyone who practices in this field.
Author Profile
Wayne Fu is a Senior Product Management in Servigistics.With operation management background, Wayne has worked in service part planning domain for more than a decade. In Servigistics, he led the research and development of various areas like install-base (provisioning) forecasting, inventory optimization and distribution planning. Currently, he is focusing on the effectiveness of forecast techniques in Last Time Buy.

1 thought on “Understanding the (S, s-1) Inventory Policy

  1. Pingback: Croston’s vs. Smoothing

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s