In almost all literature on inventory models with lost sales and periodic reviews the lead time is assumed to be either an integer multiple of or less than the review period. In a lot of practical settings such restrictions are not satisfied. We develop new models allowing constant lead times of any length when demand is compound Poisson. Besides an optimal policy, we consider pure and restricted base-stock policies under new lead time and cost circumstances. Based on our numerical results we conclude that the latter policy, which imposes a restriction on the maximum order size, performs almost as well as the optimal policy. We also propose an approximation procedure to determine the base-stock levels for both policies with closed-form expressions.

Base stock, Heuristics, Inventory, Lost sales, Periodic review,
ERIM Top-Core Articles
European Journal of Operational Research
Erasmus Research Institute of Management

Bijvank, M, & Johansen, S.G. (2012). Periodic review lost-sales inventory models with compound Poisson demand and constant lead times of any length. European Journal of Operational Research, 220(1), 106–114. doi:10.1016/j.ejor.2012.01.041