What is ‘Saw Tooth’ model used for?

The 'Saw Tooth' model is used in the field of inventory management. It is a graphical representation of inventory levels over time. The model gets its name from its resemblance to the teeth of a saw, with a steady decline in inventory (representing usage over time) followed by a sudden increase (representing replenishment).

Here are the steps to understand how it works:

1. The process begins with the maximum inventory level. This is the highest amount of inventory you want to have on hand.

2. Over time, the inventory level decreases as items are used or sold. This is represented by the downward sloping line on the graph.

3. When the inventory level hits the reorder point, a new order is placed. The reorder point is determined based on lead time (the time it takes for a new order to arrive) and the rate of usage.

4. Once the new order arrives, the inventory level jumps back up to the maximum. This is represented by the upward sloping line on the graph.

5. The process then repeats, creating a 'saw tooth' pattern.

This model is useful for managing inventory because it helps businesses maintain an optimal balance between having enough inventory to meet demand, and minimizing the costs associated with holding too much inventory.