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Finding Optimal (s, S) Policies Is About As Simple As Evaluating a Single Policy

Author

Listed:
  • Yu-Sheng Zheng

    (University of Pennsylvania, Philadelphia, Pennsylvania)

  • A. Federgruen

    (Columbia University, New York, New York)

Abstract

In this paper, a new algorithm for computing optimal ( s , S ) policies is derived based upon a number of new properties of the infinite horizon cost function c ( s , S ) as well as a new upper bound for optimal order-up-to levels S * and a new lower bound for optimal reorder levels s *. The algorithm is simple and easy to understand. Its computational complexity is only 2.4 times that required to evaluate a (specific) single ( s , S ) policy. The algorithm applies to both periodic review and continuous review inventory systems.

Suggested Citation

  • Yu-Sheng Zheng & A. Federgruen, 1991. "Finding Optimal (s, S) Policies Is About As Simple As Evaluating a Single Policy," Operations Research, INFORMS, vol. 39(4), pages 654-665, August.
    • Handle: RePEc:inm:oropre:v:39:y:1991:i:4:p:654-665
    DOI: 10.1287/opre.39.4.654
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