The Model for Optimizing Replenishment Point with Service Level Constraints

An optimizing model for studying replenishment policy with service level constraints is proposed. To realize the integrative decision of service level and replenishment point, the service level in a supply chain is defined as the probability of satisfying product demand in each planning period. Inventory variation under stochastic demand is analyzed, and the average inventory in planning periods is invited into the decision model. The planning output in every period is stochastic variables having the same distributions with the product demands. A numerical analysis is given to validate the approach.