A modification to the holding cost expression in the case of constant lead times and stochastic demands

A modification to the holding cost expression in the case of constant lead times and stochastic demands

0.00 Avg rating0 Votes
Article ID: iaor199452
Country: India
Volume: 13
Issue: 3
Start Page Number: 363
End Page Number: 374
Publication Date: Sep 1992
Journal: Journal of Information & Optimization Sciences
Authors: ,
Abstract:

In this note the authors examine a reorder point inventory system with constant lead times and stochastic demands. In the standard approach, the holding cost expression used is an overestimate because when shortages occur, holding costs are computed even though there is no safety stock on hand in such situations. The authors derive the expression for this overestimation and the size of this overestimation is numerically investigated for various demand distributions and different probabilities of stockout.

Reviews

Required fields are marked *. Your email address will not be published.