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Coefficient of Variation
What is a coefficient of variation?
Take you Standard deviation and divide it into you mean average
If you Std Dev is 2, and your mean average is 10, your coefficient of average is .2
If you Std Dev is 2, and your mean average is 4, your coefficient of average is .5
The bigger the number, the more variation you have around the mean (the bell curve will be
flatter)
The smaller the number, the more peaked or boner-esque the curve
Attention Ladies: Bigger is not always better!
Fruities
Creamie
Naughties
Creamie
Naughties
No shortages!
Level loads!
Zero inventory!
HAPPY BABY!
Lumpy Demand
With Lumpy demand, we need to bump forecast on Fruities and extra
Creamies to avoid the following conditions
Excess Inventory
No enough inventory (airfreight)
Production stops
Sad Babies
Excess Inventory