SENSITIVITY ANALYSIS OF AN (S,S) INVENTORY MODEL

We provide a sensitivity analysis of the standard periodic-review (s,S ) inventory model. Under the assumption that the demand in each period is exponentially distributed, we show that the average cost of the (s ,S) model is quite insensitive to the choice of D = S - s. Therefore w e have extended similar sensitivity results for the (r,Q) model and th e EOQ model to a special (s,S) model. Our sensitivity result also hold s for the continuous-time (s,S) model if the demand is compound Poisso n with exponential demand sizes. (C) 1997 Elsevier Science B.V.