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Myopic inventory policies using individual customer arrival information


  • Martinez de Albeniz, Victor

    () (IESE Business School)

  • Lago, Alejandro

    (IESE Business School)


We investigate optimality of myopic policies using the single-unit decomposition approach in inventory management. We derive, under certain conditions, closed-form replenishment decisions, which we call a base-probability policy. That is, the order associated with a given customer is placed if and only if its arrival probability within the lead-time is higher than a threshold.

Suggested Citation

  • Martinez de Albeniz, Victor & Lago, Alejandro, 2007. "Myopic inventory policies using individual customer arrival information," IESE Research Papers D/719, IESE Business School.
  • Handle: RePEc:ebg:iesewp:d-0719

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    References listed on IDEAS

    1. Samuel Karlin, 1960. "Dynamic Inventory Policy with Varying Stochastic Demands," Management Science, INFORMS, vol. 6(3), pages 231-258, April.
    2. Andrew J. Clark & Herbert Scarf, 2004. "Optimal Policies for a Multi-Echelon Inventory Problem," Management Science, INFORMS, vol. 50(12_supple), pages 1782-1790, December.
    3. William S. Lovejoy, 1992. "Stopped Myopic Policies in Some Inventory Models with Generalized Demand Processes," Management Science, INFORMS, vol. 38(5), pages 688-707, May.
    4. Robert S. Kaplan, 1970. "A Dynamic Inventory Model with Stochastic Lead Times," Management Science, INFORMS, vol. 16(7), pages 491-507, March.
    5. G. D. Johnson & H. E. Thompson, 1975. "Optimality of Myopic Inventory Policies for Certain Dependent Demand Processes," Management Science, INFORMS, vol. 21(11), pages 1303-1307, July.
    6. Arthur F. Veinott, Jr., 1965. "Optimal Policy for a Multi-Product, Dynamic, Nonstationary Inventory Problem," Management Science, INFORMS, vol. 12(3), pages 206-222, November.
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    inventory management; base-stock policies; myopic policies;

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