IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

A lost sales inventory model with a compound poisson demand pattern

Listed author(s):
  • SPRINGAEL, Johan
Registered author(s):

    In this paper, we study the decision problem of a retailer, who wants to optimize the amount of shelf inventory of a particular product, given that the demand for the product is stochastic and replenishment lead times (from the store’s stockroom to the shelf) are negligible. The shelf inventory is managed according to a (0,B*)-inventory policy: when the shelf inventory is sold out, the retailer gets a fixed amount of B* units from the central stockroom to replenish the shelf inventory. To adequately reflect the shopping behavior of retail customers, the demand process is modeled as a compound Poisson process, with Poisson distributed purchase quantities. When the purchase quantity of a customer exceeds the amount of shelf inventory still available, the unsatisfied demand is considered to be lost sales. As the demand process is stochastic, the runout time of the shelf in-ventory will be stochastic too. The costs per cycle related to keeping inventory on the shelf can be split up into three components: average holding costs (which may be related to the scarcity of shelf space), a fixed handling cost (per replenishment trip), and an average lost sales cost. The purpose of the model is to determine the value of B* that minimizes the average total cost per time unit.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Paper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2005017.

    in new window

    Length: 19 pages
    Date of creation: Jul 2005
    Handle: RePEc:ant:wpaper:2005017
    Contact details of provider: Postal:
    Prinsstraat 13, B-2000 Antwerpen

    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ant:wpaper:2005017. 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: (Joeri Nys)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.