An analysis of the lead time demand distribution derivation in stochastic inventory systems

Among several approaches to derive the distribution of lead time demand, this paper concerns with a compound distribution approach. The mostly known analytic models using the compound distribution approach have been done by non-recognition of the compound nature of some components to reduce the analytic task. In order to provide some precautions to researchers and practitioners, this paper conducts a theoretical examination and clarifies the assumptions implicitly made by the analytic models. In addition, comparison experiments under various situations are also conducted. (c) 2006 Elsevier B.V. All rights reserved.