Common use of Min-max To-Be Clause in Contracts

Min-max To-Be. In this situation the same parameters as in the Lead-time To-Be situation are used. The output of the optimization problem is the threshold. These values need to be converted to the minimum levels. This is done by subtracting the threshold from the turn-around stock, see Appendix K. Chapter 7‌ In all situations, the cases are simulated with the run length specified in previous section. A case is one situation with a specific utilization rate. For every case 20 runs are simulated. For every case the mean and the two-sided 95% confidence interval is calculated; respectively an upper and lower bound. For these bounds Formula 7.1 is used (Berkum & ▇▇▇▇▇▇▇▇▇▇▇, 2007). We choose for a student t-test, because the sample size is smaller than 30. The confidence intervals are used to test whether situations differ significantly from each other. Situations differ from each other when, the mean of one situation is not included in the confidence interval of the other situation. Upperbound = x + tn−1;α/2 · √n (7.1) Lowerbound = x − tn−1;α/2 · √s where x is equal to the mean, s is equal to the standard deviation, n is the sample size (in this case equal to 20) and tn 1;α/2 is the value of the student t-distribution; t19;0.025 = 2.093. In section 7.1 the Min-max As-Is situation is compared with the Lead-time As-Is situation. The Min-max As-Is, Min-max To-Be and Lead-time To-Be situations are compared in section