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Evaluation of Installation Stock Based (R, Q)-Policies for Two-Level Inventory Systems with Poisson Demand

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  • Sven Axsäter

    (Lund University, Lund, Sweden)

Abstract

We consider a two-level inventory system with one warehouse and N retailers. Leadtimes (transportation times) are constant, and the retailers face different Poisson demand processes. All facilities apply continuous review installation stock ( R , Q )-policies with different reorder points and batch quantities. We show how to evaluate holding and shortage costs exactly in case of two retailers. In case of more than two retailers we use the same methodology as an approximation. When evaluating costs at a certain retailer, the other retailers are then aggregated into a single retailer.

Suggested Citation

  • Sven Axsäter, 1998. "Evaluation of Installation Stock Based (R, Q)-Policies for Two-Level Inventory Systems with Poisson Demand," Operations Research, INFORMS, vol. 46(3-supplem), pages 135-145, June.
    • Handle: RePEc:inm:oropre:v:46:y:1998:i:3-supplement-3:p:s135-s145
    DOI: 10.1287/opre.46.3.S135
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    References listed on IDEAS

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    1. Stephen C. Graves, 1985. "A Multi-Echelon Inventory Model for a Repairable Item with One-for-One Replenishment," Management Science, INFORMS, vol. 31(10), pages 1247-1256, October.
    2. Kamran Moinzadeh & Hau L. Lee, 1986. "Batch Size and Stocking Levels in Multi-Echelon Repairable Systems," Management Science, INFORMS, vol. 32(12), pages 1567-1581, December.
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