Volume 55, Number 5, September-October 2021
|Page(s)||2785 - 2806|
|Published online||20 September 2021|
On the shortage control in a continuous review (Q, r) inventory policy using αL service-level
Department of Industrial Engineering, Universidad Técnica Federico Santa María, Avenida Españ 1680, Valparaíso, Chile
* Corresponding author: email@example.com
Accepted: 14 August 2021
Popular measures of product availability in inventory systems seek to control different aspects of stock shortages. However, none of them simultaneously control all aspects of shortages, because stock shortages in inventory systems are complex random events. This paper analyzes the performance of αL service measure, defined as the probability that stockouts do not occur during a replenishment cycle, to cover different aspects of stock shortages when used to design an optimal continuous review (Q, r) policy. We show that explicitly controlling the frequency of replenishment cycle stockouts, using the αL service-level, allows to implicitly control the size of the stockouts at an arbitrary time, the size of accumulated backorders at an arbitrary time, and the duration of the replenishment cycle stockouts. However, the cost of controlling the frequency of replenishment cycle stockouts is greater than the cost of controlling the size of stockouts and the duration of the replenishment cycle stockouts.
Mathematics Subject Classification: 90B05
Key words: Inventory control / shortage / stochastic / service-level / continuous review (Q, r) policy / service level constraint problem
© The authors. Published by EDP Sciences, ROADEF, SMAI 2021
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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