Inventories exist to provide service to customes by satisfying their demands from on hand material. Variations on the traditional continuous review formulation are investigated in an effort to improve service as measured in terms of units short. It is proposed that 'smaller' order quantities will improve service in current Navy supply operations. Basing holding costs on inventory position instead of on hand quantities does not provide significant or consistent reductions in order quantities. The desirability of smaller order quantities is not adequately tested by steady state analyses. (Author)