Lost-sales inventory theory: A review

Marco Bijvank and Iris F.A. Vis

European Journal of Operational Research, 2011, vol. 215, issue 1, 1-13

Abstract: In classic inventory models it is common to assume that excess demand is backordered. However, studies analyzing customer behavior in practice show that most unfulfilled demand is lost or an alternative item/location is looked for in many retail environments. Inventory systems that include this lost-sales characteristic appear to be more difficult to analyze and to solve. Furthermore, lost-sales inventory systems require different replenishment policies to minimize costs compared to backorder systems. In this paper, we classify the models in the literature based on the characteristics of the inventory system and review the proposed replenishment policies. For each classification and type of replenishment policy we discuss the available models and their performance. Furthermore, directions for future research are proposed.

Keywords: Inventory; Lost; sales; Replenishment; policies; Classification; of; literature (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (54)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:215:y:2011:i:1:p:1-13

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