Optimal Inventory Policies When Sales Are Discretionary
Inventory models customarily assume that demand is fully satisfied if sufficient stock is available. We analyze the form of the optimal inventory policy if the inventory manager can choose to meet a fraction of the demand. Under classical conditions we show that the optimal policy is again of the (S,s) form. The analysis makes use of a novel property of K-concave functions.
|Date of creation:||Aug 2000|
|Publication status:||Published in International Journal of Production Economics (January 2005), 93-94: 111-119|
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|Order Information:|| Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA|
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- George Hall & John Rust, 2007. "The (S,s) Policy is an Optimal Trading Strategy in a Class of Commodity Price Speculation Problems," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(3), pages 515-538, March.
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