On the (R,s,Q) Inventory Model when Demand is Modelled as a Compound Process

In this paper we present an approximation method to compute the reorder point s in a (R; s; Q) inventory model with a service level restriction, where demand is modelled as a compound Bernoulli process, that is, with a xed probability there is positive demand during a time unit, otherwise demand is zero.The demand size and replenishment leadtime are stochastic variables.It is shown that this kind of mod- elling is especially suitable for intermittent demand.Furthermore, an approximation for the expected average physical stock is derived.The quality of both the reorder point determination as well as the approximation for the expected average physical stock turn out to be excellent, as is veri ed by discrete event simulation.