Lead Time Demand Modeling in Continuous Review Supply Chain Models
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Authors
Cobb, Barry R.
Johnson, Alan W.
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Date of Issue
2013-04-01
Date
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Monterey, CA; Naval Postgraduate School
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Abstract
This paper introduces a mixture distribution approach to modeling the probability density function for lead time demand (LTD) in problems where a continuous review inventory system is implemented. The method differs from the typical “moment-matching” approach by focusing on building up an accurate, closed-form approximation to the LTD distribution from its components by using mixtures of truncated exponential (MTE) functions. First, construction of the LTD is illustrated and the approach is compared to two other possible LTDs. This distribution is then utilized to determine optimal order policies in cases where a buyer makes its decisions alone, and later in a situation where members of a two-level supply chain coordinate their actions.
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Report
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Disclaimer: The views represented in this report are those of the authors and do not reflect the official policy position of the Navy, the Department of Defense, or the federal government.
Excerpt from the Proceedings of the Tenth Annual Acquisition Research Symposium Logistics Management
Excerpt from the Proceedings of the Tenth Annual Acquisition Research Symposium Logistics Management
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NPS Report Number
NPS-LM-13-C10P05R07-065
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Prepared for the Naval Postgraduate School, Monterey, CA 93943.
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Approved for public release; distribution is unlimited.