The distribution free continuous review inventory system with a service level constraint

The stochastic inventory models require the information on the lead time demand. However, the distributional information of the lead time demand is often limited in practice. We relax the assumption that the cumulative distribution function, say F, of the lead time demand is completely known and merely assume that the first two moments of F are known and finite. The distribution free approach for the inventory model consists of finding the most unfavorable distribution for each decision variable and then minimizing over the decision variable. We apply the distribution free approach to the continuous review in-ventory system with a service level constraint. We develop an iterative procedure to find the optimal order quantity and reorder level. Key words: continuous review, service level, distribution free procedure.