This paper differentiates between an order (line) fill rate and a volume fill rate and specifies their performance for different inventory control systems. When the focus is on filling complete customer orders rather than total quantities the order fill rate would be the preferred service level measure. The main result shows how the order and volume fill rates are related in magnitude. Earlier results derived for a single-item, single-stage, continuous review inventory system with backordering and constant lead times controlled by a base-stock policy are extended in different directions. The extensions consider general continuous review policies with backordering and some related service measures. Demand is assumed to be generated by a compound renewal process. An important generalization concerns the class of customer order size distributions with increasing failure rate for which the volume fill rate always exceeds the order fill rate.
Proceedings of the 21st International Conference on Production Research, 2011
Compound demand distribution; increasing failure rate; service level; stochastic demand
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21st International Conference on Production Research, 2011