The effect of capacity limitations on safety stock

When a production system is operating at close to capacity then, after a period of high demand, it may take some time to restore stocks to the level necessary to provide a given level of stockout risk. During this period the risk of a stockout will be higher than intended. Uses simulation to show how customer service levels fall dramatically as average production levels approach available capacity and to determine the increases in levels of safety stock necessary to maintain desired customer service levels when capacity is limited.