Evaluating the robustness of lead time demand models
This paper examines the robustness of lead time demand models for the continuous review (r, Q) inventory policy. A number of classic distributions, (e.g. normal, lognormal, gamma, Poisson and negative binomial) as well as distribution selection rules are examined under a wide variety of demand conditions. First, the models are compared to each other by assuming a known demand process and evaluating the errors associated with using a different model. Then, the models are examined using a large sample of simulated demand conditions. Approximation results of inventory performance measures--ready rate, expected number of backorders and on-hand inventory levels are reported. Results indicate that distribution selection rules have great potential for modeling the lead time demand.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tadikamalla, Pandu R, 1984. "A comparison of several approximations to the lead time demand distribution," Omega, Elsevier, vol. 12(6), pages 575-581.
- Teunter, Ruud & Dekker, Rommert, 2008. "An easy derivation of the order level optimality condition for inventory systems with backordering," International Journal of Production Economics, Elsevier, vol. 114(1), pages 201-204, July.
- Katrien Ramaekers & Gerrit K. Janssens, 2008. "On the choice of a demand distribution for inventory management models," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 2(4), pages 479-491.
- Leven, Erik & Segerstedt, Anders, 2004. "Inventory control with a modified Croston procedure and Erlang distribution," International Journal of Production Economics, Elsevier, vol. 90(3), pages 361-367, August.
- Bartezzaghi, Emilio & Verganti, Roberto & Zotteri, Giulio, 1999. "Measuring the impact of asymmetric demand distributions on inventories," International Journal of Production Economics, Elsevier, vol. 60(1), pages 395-404, April.
- Heuts, R.M.J. & Strijbosch, L.W.G. & van der Schoot, E.H.M., 1999. "A Combined Forecast-Inventory Control Procedure for Spare Parts," Research Memorandum 772, Tilburg University, School of Economics and Management.
- Shore, Haim, 1999. "Optimal solutions for stochastic inventory models when the lead-time demand distribution is partially specified," International Journal of Production Economics, Elsevier, vol. 59(1-3), pages 477-485, March.
- Eliezer Naddor, 1978. "Note--Sensitivity to Distributions in Inventory Systems," Management Science, INFORMS, vol. 24(16), pages 1769-1772, December.
- Heuts, R.M.J. & van Lieshout, J.T.H.C. & Baken, K., 1986. "An inventory model : What is the influence of the shape of the lead time demand distribution?," Research Memorandum FEW 205, Tilburg University, School of Economics and Management.
When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:134:y:2011:i:1:p:159-176. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If references are entirely missing, you can add them using this form.