Determining the reorder point and order-up-to level to satisfy two constraints in a periodic review system under negative binomial demand

Determining the reorder point and order-up-to level to satisfy two constraints in a periodic review system under negative binomial demand

By: jacobsadm

June 5, 2013

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  • Author(s):
    Silver, E.A., Bischak, D.P. & Kok, A.G. de
  •  

  • Appeared In: Journal of the Operational Research Society
  • Volume: 63, 2012
  • Issue: 7
  • Pages: 941 – 949

Abstract

  • In this paper we consider an inventory management problem motivated by a specific practical context that concerns the commonly used periodic review, reorder point, order-up-to-level control system. In particular, the reorder point and order-up-to level have to be selected so as to satisfy two managementspecified constraints. First, from a marketing (or, more generally, a business) perspective, the actual fill rate achieved must be no lower than a prescribed value. Second, for production or supply purposes, the average time between consecutive replenishments must be as close as possible to a target value. The demand distribution considered is the negative binomial. An efficient procedure is developed with illustrations.

 

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