The undershoot of the reorder point: Tests of an approximation

Manuel P. Baganha, David F. Pyke, Geraldo Ferrer

Research output: Contribution to journalArticle

16 Citations (Scopus)

Abstract

We investigate a widely used approximation for the mean and variance of the undershoot. The approximation is based on the limit of the excess random variable of a renewal process as the order size approaches infinity. In the current business environment which emphasizes small batch sizes and frequent deliveries, many inventory systems order in batch sizes that are not large. We investigate the potential error that could be introduced by using the approximation for a variety of batch sizes and demand distributions.

Original languageEnglish
Pages (from-to)311-320
Number of pages10
JournalInternational Journal Of Production Economics
Volume45
Issue number1-3
DOIs
Publication statusPublished - 1 Aug 1996

Keywords

  • Computational
  • Renewal approximations
  • Undershoot

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