On using higher-order moments for stochastic inventory systems
2006 (English)In: International Journal of Production Economics, ISSN 0925-5273, Vol. 104, no 2, 454-461 p.Article in journal (Refereed) Published
The lead time demand in a stochastic inventory system is often simplified as a normal distribution in practice, whereas the higher-order moments are seldom applied in inventory management due to the difficulty of accessing necessary statistics tables for practitioners. In this paper, we have introduced the Bowman-Shenton formulae for calculating safety factors in modelling a compound distribution. This approximation makes it easy to implement the higher-order moment approach. Our numerical examples show that the system performance measure, in terms of service level, has been significantly improved when we use a Pearson curve, especially at a high service level. © 2005 Elsevier B.V. All rights reserved.
Place, publisher, year, edition, pages
2006. Vol. 104, no 2, 454-461 p.
Engineering and Technology
IdentifiersURN: urn:nbn:se:liu:diva-36507DOI: 10.1016/j.ijpe.2005.03.004Local ID: 31468OAI: oai:DiVA.org:liu-36507DiVA: diva2:257355