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Optimality of (s, S) Policies in the Infinite Horizon Dynamic Inventory Problem

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  • Donald L. Iglehart

    (Oxford University)

Abstract

The optimal ordering policy for a n-period dynamic inventory problem in which the ordering cost is linear plus a fixed reorder cost and the other one-period costs are convex is characterized by a pair of critical numbers, (s n , S n ); see Scarf, [4]. In this paper we give bounds for the sequences {s n } and {S n } and discuss their limiting behavior. The limiting (s, S) policy characterizes the optimal ordering policy for the infinite horizon problem. Similar results are obtained if there is a time-lag in delivery.

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  • Donald L. Iglehart, 1963. "Optimality of (s, S) Policies in the Infinite Horizon Dynamic Inventory Problem," Management Science, INFORMS, vol. 9(2), pages 259-267, January.
  • Handle: RePEc:inm:ormnsc:v:9:y:1963:i:2:p:259-267
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    File URL: http://dx.doi.org/10.1287/mnsc.9.2.259
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