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Inventory management: (r,S) inventory policy with normally distributed period demand

A periodic review (r,S) inventory policy with normal-distributed period demands subject to a ß-service level is considered. The lead time is assumed fixed with value E{L}. The order cycle r is computed independently from S with the help of the economic order quantity formula:


r order cycle (review period)
S reorder level
E{D} expected demand per period
E{L} lead time
E{Y} expected demand during lead time
V{Y} variance of the demand during lead time
E{Z} expected demand during (lead time + review period)
V{Z} variance of the demand during (lead time + review period)


  • normal-distributed period demand
  • ß-service level
  • backorder, no lost sales

After computation of the optimal values of s and q these values are transfered to the simulation module.


- Tempelmeier (2006)

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