A coordinated inventory control system for compound Poisson demand and zero lead time†

SUMMARY Often coordination of items for replenishment purposes can lead to significant savings in the costs of replenishment. This article presents a reasonable procedure for determining the values of the various control variables of an (S, c, e) control system, namely the Order-up-to-levels, the can-order points and the must-order points. It is assumed that demand is compound Poisson and the replenishment lead time is of negligible duration. Comparison with the best independent control strategy indicates that substantial savings (averaging 15-9% over some 64 examples) are possible through coordination of replenishments.