Determining the Reorder Point and Order-Up-To-Level in a Periodic Review System So As to Achieve a Desired Fill Rate and a Desired Average Time Between Replenishments
MetadataShow full item record
AbstractIn this paper we consider a periodic review, reorder point, order-up-to-level system, a type commonly used in practice. Motivated by a specific practical context, we present a novel approach to determining the reorder point and order-up-to-level (for a given review interval) so as to target desired values of i) customer fill rate and ii) average time between consecutive replenishments. Specifically, by using a diffusion model (producing normally distributed demand) we convert a periodic review, constant lead time setting into one having continuous review and a random lead time. The method is simple to implement and produces quite reasonable results.
This is a post-peer-review, pre-copy-edit version of an article published in the Journal of the Operational Research Society. The definitive publisher-authenticated version of E.A. Silver, H. Naseraldin, and D.P. Bischak, “Determining the reorder point and order-up-to-level in a periodic review system so as to achieve a desired fill rate and a desired average time between replenishments,” Journal of the Operational Research Society 60 (2009), 1244–1253. is available online at: http://www.palgrave-journals.com/jors/index.html. Article deposited according to publisher policy posted on SHERPA/ROMEO, Sept. 29, 2011