System Point Level Crossing Approach for Lost Sales Deteriorating Inventory Systems with Positive Lead Time

K. Preethi and B. Sivakumar ()
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K. Preethi: Madurai Kamaraj University
B. Sivakumar: Madurai Kamaraj University

Methodology and Computing in Applied Probability, 2025, vol. 27, issue 3, 1-19

Abstract: Abstract We examine continuous review inventory systems with stock decay in this article. Demand process is assumed to be Compound Poisson process with exponential demand size. Two inventory problems are developed based on the replenishment policy. While excess demand that arises during stock outs is lost, lead times are distributed exponentially in both scenarios. Using the system point method of level crossing, the steady state probability distributions of inventory level are explicitly derived for both problems. We calculate the total expected cost rates after obtaining a few system performance metrics. Results are presented in numerical form. Numerical examples are provided to illustrate the results.

Keywords: System point method; Continuous review; Lost sales; Deterioration; (s; S) policy; (s; Q) policy; 90B05; 60K05 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11009-025-10182-6

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