Determining order-up-to levels under periodic review for compound binomial (intermittent) demand

R.H. Teunter, A.A. Syntetos and M.Z. Babai

European Journal of Operational Research, 2010, vol. 203, issue 3, 619-624

Abstract: We propose a new method for determining order-up-to levels for intermittent demand items in a periodic review system. Contrary to existing methods, we exploit the intermittent character of demand by modelling lead time demand as a compound binomial process. In an extensive numerical study using Royal Air Force (RAF) data, we show that the proposed method is much better than existing methods at approximating target service levels and also improves inventory-service efficiency. Furthermore, the proposed method can be applied for both cost and service oriented systems, and is easy to implement.

Keywords: Compound; binomial; (intermittent); demand; Periodic; stock; control; Service; levels; Empirical; investigation (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:203:y:2010:i:3:p:619-624

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