On deficiencies of common ordering policies for multi-level inventory control

We consider two common types of ordering policies for multi-level inventory control: installation stock (R, Q)-policies and echelon stock (R, Q)-policies. The batch quantities are assumed to be given, but each policy is optimized with respect to its reorder point R. We demonstrate that there is no bound for the worst case performance ratio of these policies when applied to distribution inventory systems with a central warehouse and a number of retailers.