Marta E. Palmer

Effects on undershoots and lost sales on the cycle service level for periodic and continuous review policies

One of the most usual measures of customer service is the cycle service level (CSL) which indicates the specific probability of no stockout per replenishment cycle. This definition can be applied to any stock policy and demand pattern, given a known stock level at the beginning of the cycle. Some approximations have been used to compute this stock level in some scenarios not including undershoots or neglecting the probability of no demand during the cycle depending on the stock policy. However, in practice a number of different scenarios take place those basically depend on the market rules and the demand characteristics. A general approach is presented in this paper to compute the exact cycle service level in different scenarios for both periodic and continuous review policies. Additionally, this paper examines the deviations observed when the classical approximations are used. This paper is focused on uncorrelated, discrete and stationary demand with a known pattern.

On the Exact Calculation of the Fill Rate for Repairable Parts: Application to an Airline Company

This paper focuses on the improvement of inventory policies of repairable parts of the airline company Air Nostrum. The company uses the sales replacement policy to manage their repairable parts and the base stock is determined by means of an approximated expression of the fill rate assuming Poisson distributed demands. However, this paper shows that real data may not always be modelled with the Poisson distribution and the only exact method available in the literature fall into significant deviations when other discrete distribution is used. According to that, this paper derives an exact method to compute the fill rate in the presence of any stationary, discrete and i.i.d demand pattern for the policy the company uses. Illustrative examples show that deviations which arise from using approximate methods can lead to overestimate the fill rate so the inventory policy does not reach the target fill rate.

Design of a Continuous Review Stock Policy

In stock management system with inventory management policy (s, Q) sometimes managers find that is a spread between the level of service they have calculated and the real one. This is because, there are exact and approximate ways of calculating CSL (cycle service level). The former are difficult to calculate (and not typically used in business), and the latter tend to neglect the deviations in the reorder point (also called undershoots) this results in differences mentioned above. This paper presents an structured review of the literature on the methodology to be followed in the design of inventory management policy (s, Q) when demand process is stationary with discrete probability function, independent and identically distributed, and replenishment period L constant and pinpoints the most significant research gaps and also proposes guidelines for the practical application of the most usual approximations. Models are considered for lost sales and backorders.