Two replenishment strategies for the lost sales inventory model: A comparison

Two replenishment strategies for the lost sales inventory model: A comparison

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Article ID: iaor19971257
Country: Netherlands
Volume: 46/47
Start Page Number: 285
End Page Number: 295
Publication Date: Dec 1996
Journal: International Journal of Production Economics
Authors: , ,
Abstract:

For the lost sales inventory system the authors distinguish two different replenishment strategies. The simplest strategy is the classical ‘fixed reorder level’ replenishment rule: every period the inventory position in the system is raised up to a fixed quantity S. For this simple strategy the authors derive and test heuristics for the determination of the reorder level, given a target service level. Next they demonstrate that it may be more efficient in a lost sales system to use a different replenishment strategy. This alternative replenishment strategy however is more complex. Therefore a comparison is made between the two replenishment strategies in a lost sales environment, to get an indication of the price which has to be paid here for simplicity.

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