Base stock inventory systems with compound poisson demand: Case of partial lost sales

Abstract

In this paper we extend earlier work that analyzes a single echelon single item base-stock inventory system where Demand is modeled as a compound Poisson process and the lead-time is stochastic. The extension consists in considering a cost oriented system where unfilled demands are lost. The case of partial lost sales is assumed. We first model the inventory system as a Makovian M/G/∞ queue then we propose a method to calculate numerically the optimal base-stock level. A preliminary numerical investigation is also conducted to show the performance of our solution. © IFIP International Federation for Information Processing 2013.