Abstract
Order crossovers occur when replenishment orders arrive in a sequence that is different than the one in which they were placed. Order crossovers require that optimal reorder levels be set with regard to the inventory shortfall distribution rather than the lead-time demand distribution. Assuming periodic review and independent lead times, this paper suggests simple approximations of the shortfall distribution by showing that the variance of the number of orders outstanding is bounded above by the standard deviation of lead time divided by √3. Using this bound in a normal approximation improves significantly upon the common practice of basing policies on the lead-time demand distribution. A negative binomial approximation of the shortfall, based on its exact variance, offers even greater improvement, at the cost of some additional informational and computational requirements.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
