 Modified base-stock policies for continuous-review, lost-sales inventory models with Poisson demand and a fixed lead timeSøren Glud Johansen International Journal of Production Economics, 2013, vol. 143, issue 2, 379-384 Abstract: This paper reconsiders the lost-sales inventory system studied by Hill (2007). The commonly assumed policy to apply to the system is a pure base-stock policy (PBSP) for which the best base stock is easily found. Hill shows that his simple delay policy (SDP) and full delay policy (FDP) perform better. The SDP is a (s,d) policy where s is the base stock of the best PBSP and d is a common lower bound on the delay between the placement of successive replenishment orders. We show by simulation that the d value suggested by Johansen (2001) outperforms Hill's suggestion and that the performance often can be further improved by optimizing d. For the test bed investigated by Hill, we show that, for some parameter settings, an additional improvement is achieved when s and d are optimized simultaneously. The policy suggested by Johansen performs better than the FDP in all settings where the former policy reduces the average cost of the best PBSP by at least 1%. Keywords: Base-stock policy; Lost sales; Continuous review; Simulation; Optimization (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:proeco:v:143:y:2013:i:2:p:379-384 DOI: 10.1016/j.ijpe.2012.02.021 Access Statistics for this article International Journal of Production Economics is currently edited by Stefan Minner More articles in International Journal of Production Economics from Elsevier |
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