Heuristics for setting reorder levels in periodic review inventory systems with an aggregate service constraint

Inventory managers are responsible for the trade-off between inventory holding costs and customer service. In this paper we consider a periodic review multi-item system with exogenous lot-sizes backordering. The objective is to minimize total subject constraint that aggregate fill rate should be at least equal target level. weighted average of rates all items in assortment. We three ways defining rate: using generic weights, weights based on demand (volume) or (monetary) turnover. show definition service can have huge effects performance system. So, very careful which apply. also derive four heuristics determine reorder levels items. One heuristic applied many problems including multi-echelon systems constrained ready rate. Since multiple assumptions made common literature, first test accuracy these approximations simulation. Next, evaluate data from large international reseller. most accurate approximation performs best, close optimal efficient. Savings compared no level differentiation (up 28.7%) depend