Exact Analysis of Continuous Review (<i>R,Q</i>) Policies in Two-Echelon Inventory Systems with Compound Poisson Demand

Abstract

We consider a two-level inventory system with one central warehouse and N retailers. All installations apply different continuous review installation stock (R,Q) policies. The retailers face independent compound Poisson demand processes. Transportation times are constant. We present a method for exact evaluation of control policies that provides the complete probability distributions of the retailer inventory levels.