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- Title
The dynamic and stochastic knapsack Problem with homogeneous-sized items and postponement options.
- Authors
Feng, Tianke; Hartman, Joseph C.
- Abstract
This article generalizes the dynamic and stochastic knapsack problem by allowing the decision-maker to postpone the accept/reject decision for an item and maintain a queue of waiting items to be considered later. Postponed decisions are penalized with delay costs, while idle capacity incurs a holding cost. This generalization addresses applications where requests of scarce resources can be delayed, for example, dispatching in logistics and allocation of funding to investments. We model the problem as a Markov decision process and analyze it through dynamic programming. We show that the optimal policy with homogeneous-sized items possesses a bithreshold structure, despite the high dimensionality of the decision space. Finally, the value (or price) of postponement is illustrated through numerical examples. © 2015 Wiley Periodicals, Inc. Naval Research Logistics 62: 267-292, 2015
- Subjects
KNAPSACK problems; MATHEMATICAL models of decision making; POSTPONEMENT (Supply chain management); DYNAMIC programming; MARKOV processes; STOCHASTIC models
- Publication
Naval Research Logistics, 2015, Vol 62, Issue 4, p267
- ISSN
0894-069X
- Publication type
Article
- DOI
10.1002/nav.21627