Common use of Minrate Clause in Contracts

Minrate. The minrate is the fraction of the time the inventory position is equal or above the minimum level, see Formulas H.9 and H.10. α(S, K) = mi · α (S , K ) (H.9)  SiΣ−Ki P (Xi = x) if Si − Ki > 0, (H.10) αi Si, Ki  P (Xi = 0) if Si 0 if − Ki = 0, 0 Si − Ki < where α(S, K) is the aggregate minrate for a given turn-around stock vector and a minimum vector. αi(Si, Ki) is the minrate for SKU i, with a given turn-around stock, Si and a minimum level Ki. The exact value of the minrate is equal to 0.8346. In Figure H.7 it can be seen that the two values do not differ significantly. Figure H.7: Comparison of exact minrate with minrate of simulation for Min-max model, using of a t-test (α = 0.95)