Decision Sciences Journal
Volume 31, Number 1
Winter 2000
Models and Methods to Support a New Type of Inventory Performance
Measure: The ESWSO
Tonya Boone
The Ohio State University, 2100 Neil Avenue, Columbus, OH 43210-1399,
email: boone.39@osu.edu
Ram Ganeshan
The University of Cincinnati, ML #0130, Cincinnati, OH 45221-0130,
email: ram.ganeshan@uc.edu
Abstract. When analyzing a reorder point, order quantity
(r,Q) inventory systems, one important question that often gets
very little, if any, attention is: When a stockout occurs, how
large is it? This paper is directed at researchers and practicing
inventory planners with two objectives. First, we provide several
models and algorithms to compute the Expected Shortages When
a Stockout Occurs (ESWSO) for a variety of stochastic environments.
We show that when ESWSO, is used in conjunction with the traditional
fill rate measures it greatly enhances a planners ability to
plan for shortages. Second, we develop two cost-minimizing inventory
models—one addressing the backorder and the other the shortage
scenario—to show how the ESWSO can be seamlessly integrated
into an inventory-cost framework to specify lot sizes and safety
stocks.
Subject Areas: Inventory Models, Logistics, and Probability
Models. |