Corpus ID: 231639305

Projected Inventory Level Policies for Lost Sales Inventory Systems: Asymptotic Optimality in Two Regimes

  title={Projected Inventory Level Policies for Lost Sales Inventory Systems: Asymptotic Optimality in Two Regimes},
  author={W. V. Jaarsveld and J. Arts},
We consider the canonical periodic review lost sales inventory system with positive lead-times and stochastic i.i.d. demand under the average cost criterion. We introduce a new policy that places orders such that the expected inventory level at the time of arrival of an order is at a fixed level and call it the Projected Inventory Level (PIL) policy. We prove that this policy has a cost-rate superior to the equivalent system where excess demand is back-ordered instead of lost and is therefore… Expand

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