Periodic Review Inventory Models with Lost Sales
Speaker
Abstract
| The worldwide out-of-stock rate is rather high with 7–8%. These empty shelves are costing the grocery stores and their suppliers about 200 million euro a year within The Netherlands alone. In classic inventory models it is common to assume that excess demand is backordered (i.e., customers wait for a new delivery to arrive). However, studies analyzing customer behavior in practice show that about 75-85% of unfulfilled demand is lost or an alternative item/location is looked for in many retail environments. Inventory systems that include this lost-sales characteristic are more difficult to analyze. In this presentation we study different replenishment policies with the objective to minimize total costs. Besides the optimal policy, we consider easy-to-understand policies that perform near to optimal. A new type of replenishment policy is proposed as well as a heuristic procedure to determine the order moment and order size for this policy. |
| Contact information: |
| Dr. N. Mishra |
