8th International Conference of Modeling and Simulation - MOSIM10 - May 10-12, 2010 - Hammamet - Tunisia

Evaluation and optimization of innovative production systems of goods and services

ANALYSIS OF ORDER-UP-TO-LEVEL INVENTORY SYSTEMS WITH

COMPOUND POISSON DEMAND

M. Z. BABAI Z. JEMAI, Y. DALLERY

BEM-Bordeaux Management School Ecole Centrale Paris

680 cours de la Libration Grande Voie des Vignes
33405 Talence Cedex - France 92290 Chtenay Malabry - France
mohamed-zied.babai@bem.edu jemai@lgi.ecp.fr, dallery@lgi.ecp.fr

ABSTRACT: We analyse a single echelon single item inventory system where the demand and the lead time are
stochastic. Demand is modelled as a compound Poisson process and the stock is controlled according to a continuous
time order-up-to level policy. We propose a new method for determining the optimal order-up-to level for a cost
oriented inventory systems where unfilled demands are backordered. The conditions under which the system behaves
like a Make-To-Order setting are also discussed. By means of a numerical investigation, we show that the proposed
method provides very good results. It is also shown to outperform another approximate solution provided in the
literature. Our work allows insights to be gained on stock control related issues for both fast and slow moving Stock
Keeping Units.

KEYWORDS: stock control, compound Poisson, order-up-to-level, slow moving items.

generated based on a Bernoulli process, resulting in a

1 INTRODUCTION
Inventory control policies have been largely discussed in
the academic literature since the 1950s. A considerable
amount of research has been conducted to propose exact
and approximate methods to compute the optimal pa-
rameters of these policies (Porteus, 1985; Silver et al,
1998; Strijbosch, 2006). The Normal distribution is often
considered to model the demand since it is attractive
from a theoretical perspective and it is known to provide
a good empirical fit to observed demand data. It should
be noted that the normality assumption make more sense
in the context of fast moving items with demands occur-
ring regularly, which are not highly variable. Obviously,
if the demand is not as such, for example as in the case
of slow moving items or items with intermittent demand
which can be encountered in many contexts in practice,
the normality assumption is judged to be as far from ap-
propriate to be considered.
geometric distribution of the inter-demand intervals
(Boylan, 1997; Teunter et al, 2010). When time is
treated as a continuous variable, the Poisson demand
generation process results in negative exponentially dis-
tributed inter-arrival intervals. There is sound theory in
support of exponential distribution for representing the
time interval between successive demands in the context
of slow moving items (Feeney and Sherbrook, 1966;
Archibald and Silver, 1978). There is also empirical evi-
dence in support of this distribution (Janssen, 1998;
Eaves, 2002). With Poisson arrivals of demands and an
arbitrary distribution of demand sizes, the resulting dis-
tribution of total demand is compound Poisson. It should
be noted that from a modelling perspective, the com-
pound Poisson process is attractive since it can also
model the demand in the context of fast moving items by
considering very low demand time intervals. Such a
process will be considered to represent the demand in
this research work.

In practice, slow moving items and items characterized
by intermittent demand may be spare parts (engineering
spares, service parts kept at the wholesaling/retailing
level, etc.) or any Stock Keeping Unit (SKU) within the
range of products offered by all companies at any level
of a given supply chain. Such kind of items is character-
ized by occasional demand arrivals interspersed by time
intervals during which no demand occurs. As such, de-
mand is built, for modelling purposes, from constituent
elements (demand arrivals and demand sizes) that re-
quire the consideration of more specific compound de-
mand distributions. Under this context, two demand gen-
eration processes have dominated the literature. If time is
treated as a discrete (integer) variable, demand may be
Furthermore, for stock control purposes, continuous time
policies have been discussed in the academic literature
and have been reported to offer tangible benefits to
stockists dealing with both fast and slow moving items
(Strijbosch et al., 2000; Porteus, 1985; Porras and Dek-
ker, 2008). The continuous Order-Up-To-Level policy,
often called as the base stock policy, is a very appealing
policy from both a practical and theoretical perspective
since it is simple, close to optimal and reflects to a great
extent real world practices (Larsen and Thorstenson,
2008). However, despite the very many contributions in
this area and the abundance of the investigations aiming
at the determination of the optimal parameters of these
policies, there are still many unresolved issues especially
 MOSIM10 - May 10-12, 2010 - Hammamet - Tunisia
under some specific demand processes such as the com-
pound Poisson process. In fact, (i) most investigations
focus on service rather than cost-oriented systems; (ii)
there is little consideration of stochastic lead-times when
cost oriented systems are analysed; (iii) there are no
simple methods that can be implemented easily by
practitioners and enable the calculation of the optimal
order-up-to-levels, specifically in the context of slow
moving items.
In this paper, we develop a simple method than can be
used to calculate the optimal order-up-to-level in a single
echelon, single item inventory system under a compound
Poisson demand process and stochastic lead time. The
solution of the optimal order-up-to-level is derived for a
cost oriented inventory systems where unfilled demands
are backordered. Some properties of the optimal order-
up-to-level are provided. The quality of the solution is
numerically assessed in the case of both fast and slow
moving items (i.e. items with high and low demand in-
tervals, respectively). The benchmark method used in the
context of fast moving items is described in the Appen-
dix.
The remainder of the paper is organised as follows. Sec-
tion 2 describes the inventory system and presents the
notations used in the paper. The expected total cost and
the expression of the optimal order-up-to-level are de-
rived in Section 3. Section 4 presents the algorithm that
we propose to determine the optimal order-up-to-level.
In Section 5, we present the assumptions and the results
of the numerical investigation. We end in Section 6 with
conclusions and directions for further research.
2 SYSTEM DESCRIPTION AND NOTATION
We consider a single echelon single item inventory sys-
tem where the demand and the lead time are stochastic.
Demand is modelled as a compound Poisson process, i.e.
the inter-demand arrivals are exponentially distributed
and the demand size follows an arbitrary distribution.
The stock is controlled according to a continuous time
order-up-to-level policy. Each replenishment order is
associated with a stochastic lead-time characterised by
an arbitrary probability distribution and unfilled de-
mands are backordered. A penalty cost is incurred if the
demand is backordered and a holding cost is incurred if
an item is in stock, both per unit of time.
For the remainder of the paper, we denote by:
L: mean lead-time
: mean demand arrival rate
X: demand size random variable
X : mean of demand size
X : standard deviation of demand size
X i : the sum of i independent and identically distributed
random variables X
Fi : c.d.f of the random variable X i
I (t ) : inventory level at time t
S: order-up-to-level
h: inventory holding cost per unit per unit of time
b: inventory backordering cost per unit per unit of time
( X ) + = max( X ,0)
3 SYSTEM MODELLING AND ANALYSIS
The inventory system considered in our work can be
modelled as a queuing system. Each demand arrival ge-
nerates an order to the supply system to replenish the
stock. A queue is formed by the outstanding orders in the
system where the arrival process is given by the demand
arrivals (or equivalently the ordering process) and the
processing time corresponds to the replenishment lead-
time. The stock is replenished after L time units from the
demand arrival. At any time t, the inventory level I(t) is
linked to the number of outstanding orders in the system
by N(t) = S - I(t). It is easy to note that the number of
outstanding orders in the system at any time t is the
number of customers in an M/G/ queue (Kleinrock,
1975). In fact, the demand arrival process (or equivalent-
ly the ordering process) is a Poisson process with rate
and the service time (the replenishment lead-time) fol-
lows a General distribution with mean L. There is no
capacity constraint in the replenishment system which is
equivalent to an infinity number of servers in the
queuing system. For more details about the modelling of
inventory systems by using the queuing theory, the read-
er is referred to (Buzacott and Shanthikumar, 1993; Li-
beropoulos and Dallery, 2003). Hence, analysing the
inventory level I(t) is equivalent to analysing the number
of customers N(t) in an M/G/ queue.
A well-known and useful result from queuing theory
(Zipkin, 2000) is that the stationary probabilities for the
M/G/ queue are given by (1).
( L ) i e L for all i 0 (1)
pi =
i!
Thus, in the stationary regime, with probability pi there
are i orders in the system (i.e. N(t) = Xi) and there are
I(t)= S - Xi items in stock. For example, for i = 0 there is
no order in the system, i.e. the system is in state S with a
state probability p0 = e L , for i = 1 there is only one
order in the system, i.e. the system is in state S-X with a
state probability p1 = Le L , etc.
3.1 Derivation of the Optimal Order-Up-To-Level
The expected holding and backordering inventory in the
system are given by:
p0 S + pi ( S X i ) + and p (X i i S ) respectively.
i =1 i =1
 MOSIM10 - May 10-12, 2010 - Hammamet - Tunisia

Thus, the expected total inventory cost is given by equa- that by knowing the type of the distribution Fi and the
tion (2). first two moments, the analysis is straightforward.
We have considered in this work the use of both the

[
E [C ( S )] = hSp0 + h( S X i ) + + b( X i S ) + pi ] (2)
Normal and the Gamma distribution. Both are available
in commercial spreadsheet packages such as Excel.
i =1
However, although the Normal distribution is very con-
venient from an analytic standpoint, in practical situa-
Equation (2) can also be written as follows:
tions, the Gamma distribution is preferable to represent
S
demand sizes of slow moving items since it is non-

(3)
E[C ( S )] = hSp0 + h ( S x)Fi ( x)dx + b ( x S )Fi ( x)dx pi negative with high coefficients of variation. Moreover,
i =1 0 S there has been empirical evidence in its support (Kwan,
1994). Consequently, for the purpose of our numerical
Taking the derivative of the expected total cost with re- investigations in Section 5, we will use the Gamma dis-
spect to S gives: tribution.

dE [C ( S ) ] It is important to note that in practice the issue with equ-

= hp 0 + [hFi ( S ) b (1 Fi ( S )) ] pi ation (4) when it is used to determine numerically the
dS i =1 optimal order-up-to-level is that S* is a solution of an

equation that is composed of an infinite summation.
= hp 0 + [( h + b ) Fi ( S ) b ] pi
Thus, if this equation is solved by stopping the summa-
i =1
tion into a certain order, the solution that is obtained is
The objective is to find the optimal order-up-to-level that
an approximation of S*. Hence, in order to give a good
minimises the expected total cost. Note that since Fi(S) is
numerical solution of S*, a simple method should be de-
increasing in S for all i 1, this derivative is clearly in-
veloped to tackle this issue, which is the objective of the
creasing in S. Therefore, E[C(S)] is convex in S. Hence,
analysis in Section 4.
the optimal S can simply be determined by setting the
derivative to zero.
3.2 Make-To-Stock vs. Make-To-Order System
Proposition 1.
The inventory system that we are analyzing in this paper
The optimal order-up-to-level S is the solution of (4). can behave like a Make-To-Stock (MTS) or a Make-To-

( L ) i e L b (4) Order (MTO) system depending on the value of the op-

i! F ( S ) =
i e L
h+b timal order-up-to-level. In fact, if the optimal order-up-
i =1
to-level S* is equal to zero, the system behaves like a
MTO system, otherwise, if S* is strictly positive, the sys-
Proof.
tem behaves like a MTS system.
Let S* denotes the optimal order-up-to-level. The value
of S* is the solution of the equation: dE [C ( S )] = 0 Proposition 2.
dS
The system behaves like a MTO system if and only if
dE [C ( S )]

= 0 hp 0 + [( h + b) Fi ( S ) b]p i = 0 inequality (5) is satisfied

dS i =1 1 b (5)
< log
b h L h+b
Fi ( S ) pi = pi p0
i =1 ( h + b) i =1 ( h + b) Proof.
b
Fi ( S ) pi = p0 The system behaves like an MTO system, if and only if
i =1 h+b
i L
S* is equal to 0. It is easy to show that
(L) e F ( S ) = b e L


i! i h+b
i =1 S* = 0 if and only if Fi ( S * ) pi < 0 .
i =1
Thus, the optimal value S* is the solution of (4) which
ends the proof of Proposition 1. b
Fi ( S * ) pi < 0 h + b e < 0
L

i =1
The distribution that we consider to represent the random
variable of the demand size X will affect the complexity
of the analysis since in order to determine the optimal < 1 log b
order-up-to-level S, one needs the distribution of the L h+b
random variable Xi. Thus, the analysis is less complex if
the demand size distribution is regenerative, i.e. if the This ends the proof of Proposition 2.
sum of i demand size distributions is of the same type (as
e.g. for Normal or Gamma demand size distributions) so
 MOSIM10 - May 10-12, 2010 - Hammamet - Tunisia

4 APPROXIMATIONS OF THE ORDER-UP-TO- In fact, for different values of the demand interval and
LEVEL the demand size, we show numerically that S* can be
easily obtained by considering the values of SU (n) and SL
In this section, we propose a method and a simple algo- (n) with relatively low value of n.
rithm that can be used to derive good approximations of
the optimal order-up-to-level S*. Let us first introduce For high values of compared to the lead time L (i.e.
equations (6) and (7). 1/ is relatively low compared to L), it is clear that the
item can be considered as a fast moving item. In order to
n
( L ) i e L b (6) show that our method provides "good" approximations
F (S )
i
i!
=
h +b
e L of S*, we also conduct a numerical comparison of the
i =1
approximations given by our proposed algorithm and the
approximation obtained by using the classical expression
n
( L ) i e L b n
(L)i e L (7)
F ( S )
i
= e L 1 given in the literature for fast moving items. For more
i =1 i! h+b i =0 i! details on this classical expression, the reader is referred
to the Appendix.
Proposition 3.
5 NUMERICAL INVESTIGATION
The optimal S* is such that: SU (n) S* SL (n) where SU
(n) is the solution of (6) and SL (n) is the solution of (7). We start the numerical investigation by determining for
Moreover SU (n) and SL (n) converge to S* when n tends
different values of the demand arrival rate the smallest
towards infinity.
order n for which the bounds converge to the optimal
order-up-to-level within a given error threshold. The
The proof of Proposition 3 is not included in the paper
smallest value n is computed by using (8) and will be
but it may be provided by the first author upon request.
denoted by n*. To do so, the numerical values L = 1, h =1
and b = 10 are considered. Results are reported in Table
Proposition 3 shows that SU (n) and SL (n) provide
1 for three stopping criteria = 10-4, 10-3 and 10-2.
bounds on S* for different values of n and that these
bounds get tighter as n increases. As a result, S* can be 0.1 0.2 0.3 ... 0.8 0,9 1 2 3 4 5 6 7 8 9 10
approximated as closely as desired by using those = 10-4 3 3 4 6 6 6 9 11 13 15 17 19 20 23 24
bounds. n* = 10-3 2 3 3 5 5 5 8 10 11 13 15 16 18 20 21
= 10-2 1 2 2 3 4 4 7 8 9 11 12 14 15 17 18

The following algorithm can be used to compute S*.
Step 0: Initialise n = 1
Step 1:
1a: solve (6) to calculate SU (n)
1b: solve (7) to calculate SL (n)
(this can be done using a simple dichotomy algo-
rithm)
Step 3: Calculate (n) = SU (n) - SL (n)
If (n) < given, stop
Otherwise, do n = n+1 and go to step 1
Please note that for n = 1, SU (n) reduces to the approxi-
mation of the optimal order-up-to-level proposed by
Syntetos et al (2009) for an inventory system with in-
termittent demand and short lead-times.
Table 1 : Convergence order of the bounds for different
values of
As shown in Table 1, for a slow moving item (low val-
ues of ), the smallest order of convergence of the algo-
rithm n* for a stopping criterion less than 10-4 is relative-
ly low. Obviously, the order is even smaller if the stop-
ping criterion is less than 10-2. For example, for items
with 1 (i.e. demand intervals high or equal to 1
which corresponds to slow moving items), our algorithm
converges after at most 6 iterations if the stopping crite-
ria is less than 10-4 and at most 4 iterations if the stop-
ping criteria is less than 10-2. It is also clear from Table
1, that our algorithm requires more iterations to converge
in the case of fast moving items (i.e. 1).

When the algorithm presented above is used in practice,
a simple method that can be used in order to determine
the value of n for which the bounds SU (n) and SL (n)
converge to S* is to determine, for the given stopping
criterion of the algorithm , the smallest value n for
which (8) is satisfied.
i L
1 ( L ) e
n
< (8)
i =0 i!
In the next section, we investigate numerically the quali-
ty of the different approximations given by our method.
To analyse the impact of the degree of the demand in-
termittence on the quality of the calculated solution of
the optimal order-up-to-level, we plot the curves of the
upper and lower bounds SU (n) and SL (n) by varying the
demand interval (i.e. 1/ and n. Results in this section
are presented by considering the numerical values for the
demand sizes X = 10 and X = 3. The numerical values
of the lead-time and the unit costs are L = 1, h = 1, b=10.
Results are presented by considering the cases of slow
and fast moving items with different values of n. Figure
1 corresponds to the case of slow moving items (i.e. val-
ues of such that 1/ 1) and low values of n. Figure 2
 MOSIM10 - May 10-12, 2010 - Hammamet - Tunisia

corresponds to the case of fast moving items (i.e. values trol for both fast and slow moving items, we compare the
of such that 1/ 1) and high values of n. To make performance of this approximation with the optimal so-
Fig. 1 easy to read, since the values of the upper and lution given by our algorithm. In the remainder of the
lower bounds are very close from n = 2, we only present paper, this approximation will be called the "classical
the curves for n = 1, 2 and 5. approximation". The classical approximation is deter-
mined by using a Gamma distributed demand with mean
Figure 1 and figure 2 clearly show that the bounds are and variance that we compute as described the in Ap-
very close and they converge quickly to the optimal pendix based on the same numerical values presented
order-up-to-level once the algorithm reaches the smallest above for the demand size and the demand interval. Fig-
value n*. For example, for the numerical example ure 3 shows the curve of the optimal solution and the
presented above, if 1/ = 1 the upper and lower bounds classical approximation for high values of 1/ (i.e. slow
converge to the optimal solution (S* = 25.2) for n* = 6. If moving item). Figure 4 shows the curve of the optimal
1/ = 1, the upper and lower bounds converge to the solution and the classical approximation for low values
optimal solution (S* = 145.6) for n* = 24 although as of 1/ (i.e. fast moving item).
shown in Figure 2, it is difficult to distinguish
graphically between the upper and lower bounds from 30

the value n = 17.

25
Optimal Solution
100 20 Classical Approximation
SU(1)
90
SL(1) 15

S
80
SU(2)
70 SL(2) 10
Bounds

60 SU(5)
50 SL(5) 5
40
30 0
1
1,5
2
2,5
3
3,5
4
4,5
5
5,5
6
6,5
7
7,5
8
8,5
9
9,5
10
10,5
11
20 1/
10
Figure 3 : Optimal solution and classical approximation
0
for high values of 1/
1
1,5
2
2,5
3
3,5
4
4,5
5
5,5
6
6,5
7
7,5
8
8,5
9
9,5
10
10,5
11

1/

Figure 1 : Upper & lower bounds of S corresponding to 160

high values of 1/ & low values of n. 140

120 Classical approximation

160 Optimal solution
SU(15)
100
140 SL(15)
80
S

SU(17)
120
SL(17) 60
100 SU(19)
Bounds

40
SL(19)
80
20
60
0
40 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1 1,1
1/
20

0
Figure 4 : Optimal solution and classical approximation
0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1 1,1
1/
for low values of 1/

Figure 2 : Upper & lower bounds of S corresponding to Figure 3 shows that for high values of 1/ (i.e. slow
low values of 1/ & high values of n. moving item) the quality of the classical approximation
is poor. The relative error between the order-up-to-level
It should also be noted that the upper bound is generally when computed by using the classical approximation and
closer to the optimal order-up-to-level than the lower the optimal solution computed by using our algorithm
bound even for low values of n. Consequently, if a sim- can go up to 60%. As expected, this difference decreases
ple approximation is needed in practice without using when 1/ decreases. In contrast, Fig. 4 shows that for
our algorithm, the upper bound can be considered as a low values of 1/ (i.e. fast moving item), the classical
good solution of the optimal order-up-to-level. approximation gives good performance since it is almost
equal to the optimal solution for all values of 1/. This
Figure 1 shows that the inventory system behaves like a shows that the classical approximation is a good solution
Make-To-Order system for the demand interval only for fast moving items, but for slow moving ones, it
1/10.5. It is easy to check that this is the right value is far to be a good approximation.
obtained when the numerical values are replaced in (5).

To analyse the performance quality of the approximation

provided in the Appendix that is often used in stock con-
 MOSIM10 - May 10-12, 2010 - Hammamet - Tunisia
6 CONCLUSIONS AND FUTURE RESEARCH
Based on a queuing theory approach, we developed in
this paper a simple method for determining the optimal
order-up-to-level in a single echelon inventory system
under a compound process demand and stochastic lead-
time. We provided expressions of upper and lower
bounds of the optimal order-up-to-level for a cost
oriented system when unfilled demands are backordered.
These expressions can be considered as approximations
of the optimal order-up-to-level and any desired level of
accuracy can be achieved.
By conducting a numerical investigation, we showed that
the proposed bounds represent good approximations of
the optimal order-up-to-level for reasonable values of n.
The algorithm used to compute the optimal solution has
been shown to have relatively quick convergence espe-
cially for slow moving items. Furthermore, if a simple
approximation is needed in practice without the need to
use the algorithm, we recommended the use of the upper
bound since it is generally closer to the optimal order-
up-to-level than the lower bound. It is important to note
that the approximations of the order-up-to-level that we
proposed can be easily implemented and determined on
spreadsheets like Excel which is important issue for
practitioners.
Although another approximation proposed in the litera-
ture (classical approximation) is often used in stock con-
trol for both fast and slow moving items, we showed in
this paper that this approximation provides very poor
performance in a context of slow moving items. The
relative error between the classical approximation and
the optimal the order-up-to-level can go up to 60%
which is a huge difference that the practitioners should
be aware of it. Obviously, as it is expected the classical
approximation gives good performance when applied to
a fast moving demand. As a conclusion to this analysis,
it is then recommended to not consider this approxima-
tion in future research dealing with stock control of slow
moving items. In the other hand, it is clear that our ap-
proach gives better approximations of the optimal order-
up-to-level in both the slow and the fast moving items
contexts.
There are many ways to extend this research work. It
would be interesting in a first step to extend this investi-
gation by conducting an empirical investigation using
real data to assess the benefit of applying our approxima-
tions in a real context and to report the benefit in terms
of cost savings. We should say that such an investigation
necessitates non only real data on demand histories for
slow moving SKUs but also requires real cost figures
which could be a difficult task in practical settings.
We also attract the attention of the reader about the issue
of the distribution to consider while modelling the de-
mand in the context of slow moving items (i.e. represen-
tation of demand sizes and demand intervals). This issue
has been repeatedly questioned in the academic literature
(Willemain et al, 1994, Syntetos et al, 2010) so another
interesting research would be to assess the validity of the
considered distributions.
It is also worthwhile to highlight in this last section of
the paper the limits regarding our assumption on the sta-
tionarity of the demand sizes and demand intervals, es-
pecially in this context of slow moving items. Thus,
another avenue of further research is to find a way to
take into account in the analysis the non-stationarity of
the demand pattern which will be of a considerable bene-
fit to both the academic researchers and the practitioners.
APPENDIX
An approximation of the optimal order-up-to-level S for
fast moving SKUs (Silver et al, 1998) is given by:
b (9)
FDL ( S ) =
h+b
where FDL(.) denotes the cumulative probability distribu-
tion of the demand during the lead-time. The lead-time
demand is with mean DL and standard deviation DL,
where DL = LX and DL = L( X2 + X2 ) .
For slow moving SKUs (9) has also been used in the
literature to determine the optimal order-up-to-level
(Syntetos et al, 2006). This is obviously reasonable only
if appropriate probability distributions for the lead-time
demand and appropriate estimates of the mean and
variance of the distribution are considered.
REFERENCES
Archibald B.C. and Silver E.A. (1978). (s,S) Policies
under Continuous Review and Discrete Compound
Poisson Demand. Management Science, vol. 24, 9,
p. 899-909.
Boylan, J.E. (1997). The centralisation of inventory and
the modelling of demand. Unpublished Ph.D. thesis,
University of Warwick, UK.
Buzacott, J.A. and Shanthikumar, J.G. (1993), Stochastic
Models of Manufacturing Systems, Englewood
Cliffs, NJ: Prentice-Hall.
Eaves, A.H.C. (2002), Forecasting for the ordering and
stock holding of consumable spare parts, Unpub-
lished Ph.D. thesis, Lancaster University, UK.
Feeney, G.J. and Sherbrook, C.C. (1966) the (S-1,S) In-
ventory Policy Under Compound Poisson Demand.
Management Science, vol. 12, p. 391-411.
Janssen, F.B.S.L.P. (1998) Inventory management sys-
tems; control and information issues. Published
 MOSIM10 - May 10-12, 2010 - Hammamet - Tunisia
Ph.D. thesis, Centre for Economic Research, Tilburg
University, The Netherlands.
Kleinrock, L. (1975). Queueing Systems, Vol. I: Theory.
Wiley, New York.
Kwan, H.W. (1991) On the demand distributions of slow
moving items. Unpublished Ph.D. thesis, Lancaster
University, UK.
Larsen, C. and Thorstenson, A. (2008). A comparison
between the order and the volume fill rate for a
base-stock inventory control system under a com-
pound renewal demand process. Journal of the Op-
erational Research Society, p. 1-7.
Liberopoulos, G. and Dallery, Y. (2003). Comparative
modelling of multi-stage production-inventory con-
trol policies with lot sizing, International Journal of
Production Research, vol. 41, 6, p. 12731298.
Porras, E.M. and Dekker, R. (2008). An inventory con-
trol system for spare parts at a refinery: An empiri-
cal comparison of different reorder point methods.
European Journal of Operational Research, vol.
184, 1, p. 101-132.
Porteus, E.L. (1985). Numerical comparisons of invento-
ry policies for periodic review systems. Operations
Research, vol. 33, 1, p. 134-152.
Sani, B. and Kingsman, B.G. (1997). Selecting the best
periodic inventory control and demand forecasting
methods for low demand items. Journal of the Oper-
ational Research Society, vol. 48, p. 700-713.
Silver, E.A., Pyke, D.F. and Peterson, R. (1998) Invento-
ry management and production planning and sche-
duling. Third edition, John Wiley & Sons, Inc., New
York.
Strijbosch, L.W.G., Heuts, R.M.J. and van der Schoot,
E.H.M (2000). A combined forecast-inventory con-
trol procedure for spare parts. Journal of the Opera-
tional Research Society, vol. 51, p. 1184-1192.
Strijbosch, L.W.G., Moors, J.J.A. (2006). Modified nor-
mal demand distributions in (R,S)-inventory control.
European Journal of Operational Research, vol. 172,
p. 201212.
Teunter, R., Syntetos, A.A. and Babai, M.Z. (2010). De-
termining Order-Up-To Levels under Periodic Re-
view for Compound Binomial (Intermittent) de-
mand. European Journal of Operational Research,
vol. 203, p. 619-624.
Syntetos A.A. and Boylan J.E. (2006). On the stock-
control performance of intermittent demand estima-
tors. International Journal of Production Econom-
ics, vol. 103, p. 36-47.
Syntetos, A.A., Babai, M.Z., Dallery, Y. and Teunter, R.
(2009). Periodic control of intermittent demand
items: theory and empirical analysis. Journal of the
Operational Research Society, vol. 60, p. 611-618.
Syntetos, A.A., Babai, M.Z., Lengu, D., Altay, N.
(2010). Distributional assumptions for parametric
forecasting of intermittent demand. Service Parts
Management: Demand Forecasting and Inventory
(eds: Altay, N. and Litteral, L.A.), Springer Verlag.
Williams, T.M. (1982). Reorder levels for lumpy de-
mand. Journal of the Operational Research Society,
vol. 33, p. 185-189.
Zipkin P.H. (2000). Foundations of Inventory
Management. McGraw-Hill, Inc.: Boston, MA.