Evaluation of base-stock policies in multiechelon inventory systems with compound-Poisson demands

This article analyzes a model of a multiechelon inventory system: The exogenous demands form independent compound-Poisson processes. Each location follows a base-stock policy. The transit times between locations may be stochastic. Instead of assuming independent transit times, the paper follows an approach closer to the standard treatment of single-location models. It develops procedures to compute steady-state performance measures, including average backorders and average inventories. The model and the analysis generalize those of Svoronos and Zipkin, who treat the case of pure Poisson demands.