ON LEAD TIME DEMAND DISTRIBUTIONS.

A key factor in establishing inventory policy for an item is the procurement lead time demand distribution (LTDD). Demand during lead time is a random variable if at least one of the components—length of lead time, order intensity, and order size—is a random variable. This paper discusses the problem of estimating the functional form of the LTDD for various combinations of the component random variables, using the method of generating functions. Since a normal approximation will often be used in practice, expressions are also given for the mean and variance of the LTDD for the various cases. [ABSTRACT FROM AUTHOR]