Warehouse–retailer system with stochastic demands–non – identical retailer case

We consider a warehouse–retailer system where both the warehouse and the retailers operate under continuous review (s, S) policies with different lot-sizes. The demand process at the warehouse is based on the orders placed by the individual retailers whose demands follow stationary Poisson processes with different demand rates. We provide estimates for the steady-state expected upper bound of the number of units short per unit time which can be used as a performance measure of the distribution systems. This expected upper bound is obtained by using probability approximation and other heuristic approaches. The results compared favorably with those obtained via simulation.