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The Optimal Level of Inventories Is the Level at Which

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The optimal level of inventories is the level at which the extra cost (in lost sales) from lowering inventories by a small amount is greater than the gain (in interest revenue and decreased storage costs).


Definitions:

Universal Instantiation

A logical rule stating that if a property is true for all members of a domain, it is true for any specific member of that domain.

Universal Generalization

A logical inference rule stating that if something is true for all cases, then it is true in general.

Quantifier Negation

The logical operation of negating or reversing the scope of a quantifier in a statement, changing its encompassing range over the subjects it addresses.

Existential Generalization

A form of inference where from a specific case one concludes the existence of an instance satisfying a particular condition.

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