Inventory models need some specification of the distribution of demand in order to find the optimal order-up-to level or reorder point. This distribution is unknown in real life and there are several solutions to overcome this problem. One approach is to assume a distribution, estimate its...

To model demand, the normal distribution is by far the most popular; the disadvantage that it takes negative values is taken for granted. This paper proposes two modifications of the normal distribution, both taking non-negative values only. Safety factors and order-up-to-levels for the familiar...