The lognormal approximation to the lead time demand in inventory control

Abstract

This paper is intended to show that the lognormal distribution can be used to approximate the lead time demand in inventory control problems. The computations involved with this approximation are shown to be simpler compared to the gamma distribution approximation. Some pertinent properties of the lognormal distribution are summarized. Numerical examples are given in two cases of distributed demands and lead times and in each case the lognormal approximation results are compared with the exact and/or other approximations.