Article ID: | iaor19971250 |
Country: | Netherlands |
Volume: | 45 |
Issue: | 1/3 |
Start Page Number: | 311 |
End Page Number: | 320 |
Publication Date: | Aug 1996 |
Journal: | International Journal of Production Economics |
Authors: | Pyke David F., Baganha Manuel P., Ferrer Geraldo |
The authors investigate a widely used approximation for the mean and variance of the undershoot. The approximation is based on the limit of the excess random variable of a renewal process as the order size approaches infinity. In the current business environment which emphasizes small batch sizes and frequent deliveries, many inventory systems order in batch sizes that are not large. The authors investigate the potential error that could be introduced by using the approximation for a variety of batch sizes and demand distributions.