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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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Suresh P. Sethi & Feng Cheng, 1997. "Optimality of ( s , S ) Policies in Inventory Models with Markovian Demand," Operations Research, INFORMS, vol. 45(6), pages 931-939, December.
- 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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