Crossover aware base stock decisions for service-driven systems

We investigate the impact of order crossover on a periodic, order-up-to (R,S) inventory system where attaining a target service level is the focus. We first address two crossover related assumptions and then explore five methods of including crossover information into the process of determining the order-up-to level (S). We develop a hybrid discrete-event/continuous simulation model and perform a full-factorial simulation study under various conditions of target service level, demand variance, and lead-time variance. We find the method used to include crossover information into the decision significantly impacts service performance and that methods based on effective lead-time observations perform best.