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.
- s is normally the reorder point
- 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.