Abstract
The fill rate is usually computed by using the traditional approach, which calculates it as the complement of the quotient between the expected unfulfilled demand and the expected demand per replenishment cycle. However, when dealing with continuous review the common derivation of the order point, order quantity (s, Q) policy simplify the computation of the expected unfulfilled demand per replenishment cycle by means of neglecting undershoots at order point s. This paper shows, by means of some illustrative examples and using simulation, how neglecting undershoots at s introduces a significant bias on the estimation of the fill rate. The fill rate is systematically overestimated by the traditional approach. Practical implication of this performance leads to design policies that are less protected than managers may expect. This paper focuses on the lost sales case and discrete demands.
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Guijarro, E., Babiloni, E., Cardós, M. (2018). On the Impact of Undershoots at Order Point in the Fill Rate Estimation in Continuous Review Policies for the Lost Sales Case. In: Viles, E., Ormazábal, M., Lleó, A. (eds) Closing the Gap Between Practice and Research in Industrial Engineering. Lecture Notes in Management and Industrial Engineering. Springer, Cham. https://doi.org/10.1007/978-3-319-58409-6_18
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DOI: https://doi.org/10.1007/978-3-319-58409-6_18
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