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Error reduction in an (r,Q) normal demand inventory system

Book Contribution - Book Chapter Conference Contribution

In practice inventory models are still very often based upon normal distribution although more accurate representations exist. For the performance measures such as average inventory, average backorders, ready rate, fill rate and orderline service level further simplifications are also applied without knowing the risks linked to it. We analyze the maximum and average errors on these performance measures when a Poisson or compound Poisson leadtime demand is approximated with a normal distribution. Conditions are defined to allow the use of simplified equations and corrections are made. The modifications are very simple allowing a quick implementation in practice and existing models.
Book: 4th International Conference on Information Systems, Logistics and Supply Chain, Proceedings
Number of pages: 1
Accessibility:Closed