University of Belgrade, Faculty of Organizational Sciences Laboratory for Operations Research
The stochastic inventory models analyzed in this study involve two models that are continuous review and periodic review. Instead of having a stockout cost term in the objective function, a service level constraint is added to each model. For both these models with a mixture of backorders and lost sales, we first assume that the lead time (L)/protection interval (T + L) demand follows a normal distribution, and then relax this assumption by only assuming that the mean and variance are known. For each case, we develop a procedure to find the optimal solution, and then an illustrative numerical example is given.
Yugoslav Journal of Operations Research 10(1), pp.81-98