Estimating the lead-time demand distribution when the daily demand is non-normal and autocorrelated (Q1822146)

This paper develops convenient formulas for estimating the probability distribution of lead time demand when the inventory item's daily demand follows a probability distribution of any arbitrary shape, and when simple univariate models can be found for the autocorrelated daily demand series. Numerical examples are presented to illustrate the use of these formulas. The numerical results also indicate that significant error may be incurred when inventory decisions are made without proper consideration of the autocorrelations or the arbitrary distribution shapes of daily demands.