Evaluating the robustness of lead time demand models

Manuel D. Rossetti and Yasin Ünlü

International Journal of Production Economics, 2011, vol. 134, issue 1, 159-176

Abstract: This paper examines the robustness of lead time demand models for the continuous review (r, Q) inventory policy. A number of classic distributions, (e.g. normal, lognormal, gamma, Poisson and negative binomial) as well as distribution selection rules are examined under a wide variety of demand conditions. First, the models are compared to each other by assuming a known demand process and evaluating the errors associated with using a different model. Then, the models are examined using a large sample of simulated demand conditions. Approximation results of inventory performance measures--ready rate, expected number of backorders and on-hand inventory levels are reported. Results indicate that distribution selection rules have great potential for modeling the lead time demand.

Keywords: Lead; time; demand; distribution; Distribution; selection; rule; Highly; variable; demand; Re-order; point; re-order; quantity; policies (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:134:y:2011:i:1:p:159-176

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