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We develop the equilibrium equations for the a model generalizing thecontinuous review (r, q) lost-sales model with constant lead time, multipleoutstanding orders and unit Poisson demand. Demand rate is allowed to depend oninventory level. The model is solved for the case r=2,q=2 as well as thegeneral case q=1. An application is given for a system involving lateraltransshipments.

The equilibrium equations for the lost sales (r,q) policy with inventory level dependent demand and multiple outstanding orders