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- Title
Technical Note--New Sufficient Conditions for (s, S) Policies to be Optimal in Systems with Multiple Uncertainties.
- Authors
Gongtao Chen, Lucy; Robinson, Lawrence W.; Roundy, Robin O.; Zhang, Rachel Q.
- Abstract
In today's business environment, unpredictable economic and noneconomic forces can affect firms' operational costs and discount factors, as well as demand. In this paper, we incorporate these uncertainties into a single-product, periodic-review, finite-horizon stochastic inventory system by modeling operational costs, discount factors, and demands as stochastic processes that evolve over time. We study three stockout protocols and establish conditions under which (s, S) inventory policies are optimal when discount factors, operational costs, and demands are stochastic and correlated both to one another and over time. Examples are provided to demonstrate nontrivial optimal policies in the absence of these sufficient conditions.
- Subjects
UNCERTAINTY (Information theory); INSTITUTIONAL environment; OPERATING costs; DISCOUNT prices; STOCHASTIC processes
- Publication
Operations Research, 2015, Vol 63, Issue 1, p186
- ISSN
0030-364X
- Publication type
Article
- DOI
10.1287/opre.2014.1335