Comparison of wait time approximations in distribution networks using (R,Q)-order policies

TL;DR

This paper evaluates various wait time approximations in distribution networks with (R,Q)-order policies through extensive simulations, providing practical guidelines for selecting suitable approximations based on demand data.

Contribution

It offers a comprehensive comparison of existing wait time approximations using realistic simulation data, including real-world demand, and provides practical selection guidelines.

Findings

Certain approximations perform better under specific demand conditions.

Real-world demand data can influence the accuracy of approximations.

Guidelines help practitioners choose appropriate wait time models.

Abstract

We compare different approximations for the wait time in distribution networks, in which all warehouses use an (R,Q)-order policy. Reporting on the results of extensive computational experiments, we evaluate the quality of several approximations presented in the literature. In these experiments, we used a simulation framework that was set-up to replicate the behavior of the material flow in a real distribution network rather than to comply with the assumptions made in the literature for the different approximation. First, we used random demand data to analyze which approximation works best under which conditions. In a second step, we then checked if the results obtained for random data can be confirmed also for real-world demand data from our industrial partner. Eventually, we derive some guidelines which shall help practitioners to select approximations which are suited well for their application. Still, our results recommend further testing with the actual application's data to verify if a chosen wait time approximation is indeed appropriate in a specific application setting.