Fill rate estimation in periodic review policies with lost sales using simple methods

Abstract

Purpose: The exact estimation of the fill rate in the lost sales case is complex and time consuming. However, simple and suitable methods are needed for its estimation so that inventory managers could use them.

Design/methodology/approach: Instead of trying to compute the fill rate in one step, this paper focuses first on estimating the probabilities of different on-hand stock levels so that the fill rate is computed later.

Findings: As a result, the performance of a novel proposed method overcomes the other methods and is relatively simple to compute.

Originality/value: Existing methods for estimating stock levels are examined, new procedures are proposed and their performance is assessed.