The undershoot of the reorder point: Tests of an approximation

The undershoot of the reorder point: Tests of an approximation

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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: , ,
Abstract:

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.

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