Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/43047
Title: A comparison of different methods for estimating the average inventory level in a (Q,R) system with backorders
Authors: Lau, AHL
Lau, HS
Keywords: Inventory
(Q,R) models
Heuristics
Issue Date: 2002
Publisher: Elsevier
Source: International journal of production economics, 2002, v. 79, no. 3, p. 303-316 How to cite?
Journal: International journal of production economics 
Abstract: In a continuous-review order-quantity-reorder-point inventory system with backordering, the most common approximation to the average inventory level is Hadley–Whitin's expression (12Q+safety stock), where Q is the order quantity. In the literature it has been indicated that this approximation depends on the assumption of negligible stockout probability; for situations in which this assumption is violated, various alternative approximation expressions have been developed. This study shows that: (i) Hadley–Whitin's expression is more robust than the literature appears to imply; (ii) the currently available alternatives are not sufficiently accurate to take over when the Hadley–Whitin approximation's accuracy begins to deteriorate due to increasing stockout probability. A simpler and more accurate alternative approximate expression is then presented, and its applications are illustrated.
URI: http://hdl.handle.net/10397/43047
ISSN: 0925-5273
DOI: 10.1016/S0925-5273(02)00257-8
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