Article ID: | iaor19992789 |
Country: | Netherlands |
Volume: | 109 |
Issue: | 3 |
Start Page Number: | 646 |
End Page Number: | 659 |
Publication Date: | Sep 1998 |
Journal: | European Journal of Operational Research |
Authors: | Lee Hau L., Hausman Warren H., Zhang Alex X. |
We consider a multi-term inventory system with dependent item demands represented by a multivariate normal distribution and filled under a First-Come-First-Served rule. Each item is managed independently through a periodic review order-up-to policy while all items have the same review cycle. We obtain the joint demand fulfillment probability within a pre-specified time window. We also study the problem of maximizing the joint demand fulfillment probability and discuss a heuristic approach in which equal safety factors (equal fractiles) are specified for all items. Finally we present numerical results and an application with actual data.