Je. Tyworth et L. Oneill, ROBUSTNESS OF THE NORMAL APPROXIMATION OF LEAD-TIME DEMAND IN A DISTRIBUTION SETTING, Naval research logistics, 44(2), 1997, pp. 165-186
Citations number
36
Categorie Soggetti
Operatione Research & Management Science","Operatione Research & Management Science","Engineering, Marine
Previous studies criticize the general use of the normal approximation
of lead-time demand on the grounds that it can lead to serious errors
in safety stock. We reexamine this issue for the distribution of fast
-moving finished goods. We first determine the optimal reorder points
and quantities by using the classical normal-approximation method and
a theoretically correct procedure. We then evaluate the misspecificati
on error of the normal approximation solution with respect to safety s
tock, logistics-system costs, total costs (logistics costs, including
acquisition costs), and fill rates. The results provide evidence that
the normal approximation is robust with respect to both cost and servi
ce for seven major industry groups. (C) 1997 John Wiley & Sons, Inc.