A note on the analysis of (Q, r) policy: Generalised lambda distribution approximation vs distribution free approach

In this article, we consider the analysis of a continuous review (Q, r) inventory model with a mixture of back orders and lost sales, assuming Weibull distribution for the lead time demand (LTD). The use of generalized λ-type distribution (GLD) in approximating the LTD is demonstrated. Through numerical studies, optimal values of the policy parameters are obtained under GLD approximation method, the distribution free approach, and the exact case. Further, the expected value of additional information which serves as a measure of efficiency of the procedure is provided for both the GLD and the distribution free procedures.