1.2. Inventory performance measures
In inventory management a set of performance measures are used to express the quality of the policy. A well known performance
measure is the stockout frequency A (percentage of time there is no stock). In case of a normal demand this measure
can be expressed using the normal cumulative distribution and its loss function. The stockout frequency expression may
vary depending on the replenishment policy. We will refer here to the ðr;QÞ policy in which an order of size Q is placed as
soon as the inventory position falls to or below the reorder point r. In Section 4.9 from Hadley and Within [10] the normal
demand approximation is already discussed and they make use of (5) to express the considered performance measure and an
additional root-finding method is assumed to compute the inverse function. Zipkin [11] expresses in Section 6.4.3 the stockout
frequency as (6) and this can be simplified in practice for most cases to (7). So computing the optimal reorder point r
value requires the function