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

Listed author(s):
  • E A Silver

    (Haskayne School of Business, University of Calgary, Calgary, Canada)

  • D P Bischak

    (Haskayne School of Business, University of Calgary, Calgary, Canada)

  • T de Kok

    (Technische Universiteit Eindhoven, Eindhoven, the Netherlands)

Registered author(s):

    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 management-specified 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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    Article provided by Palgrave Macmillan & The OR Society in its journal Journal of the Operational Research Society.

    Volume (Year): 63 (2012)
    Issue (Month): 7 (July)
    Pages: 941-949

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    Handle: RePEc:pal:jorsoc:v:63:y:2012:i:7:p:941-949
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