Monotonicity properties of stochastic inventory systems

The principal performance measures in an inventory system involve key characteristics of the system's inventory position, i.e., the total inventory the firm is economically committed to, as well as the average order size or order frequency. As to the former, the focus among operation managers is on the maximum inventory (position), the average inventory and the minimum inventory, the latter being related to the so-called safety stock concept. Financial analysts and macroeconomists pay particular attention to the sales/inventory ratio, also referred to as the inventory turnover.