Determining order-up-to levels under periodic review for compound binomial (intermittent) demand

R. H. Teunter*, A. A. Syntetos, M. Z. Babai

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

58 Citations (Scopus)

Abstract

We propose a new method for determining order-up-to levels for intermittent demand items in a periodic review system. Contrary to existing methods, we exploit the intermittent character of demand by modelling lead time demand as a compound binomial process. in an extensive numerical study using Royal Air Force (RAF) data, we show that the proposed method is much better than existing methods at approximating target service levels and also improves inventory-service efficiency. Furthermore, the proposed method can be applied for both cost and service oriented systems, and is easy to implement. (C) 2009 Elsevier B.V. All rights reserved.

Original languageEnglish
Pages (from-to)619-624
Number of pages6
JournalEuropean Journal of Operational Research
Volume203
Issue number3
DOIs
Publication statusPublished - 16-Jun-2010

Keywords

  • Compound binomial (intermittent) demand
  • Periodic stock control
  • Service levels
  • Empirical investigation
  • INVENTORY CONTROL
  • STOCK CONTROL

Cite this