 Analysis of order-up-to-level inventory systems with compound Poisson demandM.Z. Babai, Z. Jemai and Y. Dallery European Journal of Operational Research, 2011, vol. 210, issue 3, 552-558 Abstract: We analyse a single echelon single item inventory system where the demand and the lead time are stochastic. Demand is modelled as a compound Poisson process and the stock is controlled according to a continuous time order-up-to (OUT) level policy. We propose a method for determining the optimal OUT level for cost oriented inventory systems where unfilled demands are backordered. We first establish an analytical characterization of the optimal OUT level. The actual calculation is based on a numerical procedure the accuracy of which can be set as highly as desired. By means of a numerical investigation, we show that the method is very efficient in calculating the optimal OUT level. We compare our results with those obtained using an approximation proposed in the literature and we show that there is a significant difference in accuracy for slow moving items. Our work allows insights to be gained on stock control related issues for both fast and slow moving Stock Keeping Units (SKUs). Keywords: Stock; control; Compound; Poisson; Queuing; system; Order-up-to-level; Slow; moving; items (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:210:y:2011:i:3:p:552-558 Access Statistics for this article European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati More articles in European Journal of Operational Research from Elsevier |
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