System Point Level Crossing Approach for Lost Sales Deteriorating Inventory Systems with Positive Lead Time

We examine continuous review inventory systems with stock decay in this article. Demand process is assumed to be Compound Poisson process with exponential demand size. Two inventory problems are developed based on the replenishment policy. While excess demand that arises during stock outs is lost, l...

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Bibliographic Details
Published inMethodology and computing in applied probability Vol. 27; no. 3; p. 52
Main Authors Preethi, K., Sivakumar, B.
Format Journal Article
LanguageEnglish
Published New York Springer US 01.09.2025
Springer Nature B.V
Subjects
Business and Management
Demand
Economics
Electrical Engineering
Inventory
Lead time
Level crossings
Life Sciences
Mathematics and Statistics
Performance measurement
Statistical analysis
Statistics
 
Lost sales
System point method
Deterioration
(
Continuous review
60K05
90B05
policy
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Summary:We examine continuous review inventory systems with stock decay in this article. Demand process is assumed to be Compound Poisson process with exponential demand size. Two inventory problems are developed based on the replenishment policy. While excess demand that arises during stock outs is lost, lead times are distributed exponentially in both scenarios. Using the system point method of level crossing, the steady state probability distributions of inventory level are explicitly derived for both problems. We calculate the total expected cost rates after obtaining a few system performance metrics. Results are presented in numerical form. Numerical examples are provided to illustrate the results.
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ISSN:1387-5841
1573-7713
DOI:10.1007/s11009-025-10182-6