Establishing reorder points in the ( S,c,s ) coordinated control system under compound Poisson demand

Abstract

This paper is concerned with the coordinated control of a group of inventoried items in order to reduce the costs of replenishments. The specific control system considered is what is denoted as an (S,c,s) system. The very general case of compound Poisson demand is considered. In earlier work a procedure was developed for finding the order-up-to levels (i.e. the Ss) and the can-order points (i.e. the cs) for the case of a negligible lead time. Taking these quantities as input an algorithm is developed for finding the must-order points (i.e the.s values) so as to satisfy one of two types of service constraints specified item by item. The results of two numerical illustrations are also shown.

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