@conference{Disney2010,
  author       = {G. Gaalman, S.M. Disney},
  title        = {The base stock policy: Comparison with the order-up-to policy for ARMA (p, q) demand},
  booktitle    = {in Grubbström, R.W., Hinterhuber, H.H., (Eds), Pre-prints of the 16th International Working Seminar of Production Economics},
  year         = {2010},
  pages        = {175-186},
  address      = {Innsbruck, Austria},
  month        = {March 1st-5th},
  url          = {https://www.researchgate.net/publication/394267919_The_base_stock_policy_Comparison_with_the_order-up-to_policy_for_ARMApq_demand},
  abstract     = {It is often recommended that within the base stock (BS) policy the forecast of the lead-time (and review period) demand is set to a constant usually assumed to be equal to the average demand. Although this is not an optimal technique for minimising forecast errors (or equivalently inventory costs) for all demand processes it is simple to use and thus may be popular in industry. We study the dynamics of the BS policy and compare the policy with an order-to-up (OUT) policy that uses an optimal forecasting technique obtained by conditional expectation. We do this for the general case of ARMA(p,q) demand. We also consider “proportional” variations of the two policies. By “proportional” we mean that the there is a proportional controller in the inventory position feedback loop in both the BS and the OUT policy. We compare the policies via a bullwhip and inventory variance analysis. Whilst the OUT policy can be shown to be superior in terms of inventory costs, the BS policy does exhibit better bullwhip performance. As a consequence of this, the BS policy is able to reduce capacity and over-time requirements in comparison to the OUT policy. However, the BS policy absorbs all the demand uncertainty in the inventory, and thus is not a policy we strongly recommend.}
  }