Akbari Jokar - Department of Industrial Engineering, Sharif University of Technology, Tehran, Iran
Seifbarghy - Department of Industrial Engineering, Sharif University of Technology, Tehran, Iran

The inventory system under consideration consists of one central warehouse and an arbitrary number of retailers controlled by continuous review inventory policy (R, Q). We assume independent poisson demands with constant lead times (transportation times) for all retailers and a constant lead time for replenishing orders from an external supplier together with "all or nothing" policy for the warehouse. Unsatisfied demands are assumed to be lost in the retailers and orders incurred stock out in the warehouse, are backordered. We approximate demand in the warehouse as poisson together with its mean rate. We then compare the approximation results with simulation for the average waiting time of the orders in the warehouse as the criteria for performance of the approximation. Less error of the mentioned criteria means that our approximation of poisson demand in the warehouse works better.

Inventory, Multi Echelon, Lost Sale, Poisson Demand