Compound distributions with efficient computation in inventory model applications

Donald L. Bott

Naval Research Logistics Quarterly, 1977, vol. 24, issue 3, 407-416

Abstract: In an inventory model, the distribution of total units demanded can be considered as a compound distribution arising from the distributions of demand occurrence and individual demand size. Three such compound distributions are considered, where the number of demands is Poisson distributed. The demand size distribution will depend on the observed or desired variance‐to‐mean ratio. An approximation using the gamma distribution is given in terms of the cumulants of the compound distribution for both fixed and stochastic lead times.

Date: 1977
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Persistent link: https://EconPapers.repec.org/RePEc:wly:navlog:v:24:y:1977:i:3:p:407-416

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